Indonesia outlines plans for new refineries, upgrades

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Feb. 15 -- Indonesia's state-owned PT Pertamina, aiming to reduce fuel imports by boosting domestic supply, plans to construct two new refineries and upgrade an existing facility.

"We still import fuels in a large volume," said Indonesian President Bambang Susilo Yudhoyono, adding that, as a matter of economic efficiency, Pertamina "will build three refineries within 3-5 years."

Pertamina Corp. Sec. Toharso said two of the planned refineries would be new: one in Bojonegara, Banten, and another in Tuban, East Java. The third project, meanwhile, will be an expansion of the existing refinery at Balongan in West Java.

The total capacity of the three planned refineries will be 400,000 b/d, Toharso said, adding that Pertamina is looking for partners for oil supplies as well as for financing of the new facilities.

"We're considering an Iranian company to become our crude oil supplier," Toharso said. "But the process is progressing slowly and we're trying to expedite this."

The decision to construct new refineries comes as Indonesia's domestic demand has far outstripped Pertamina's production.

In 2008, Pertamina produced 227.2 million bbl of fuels and imported 142.1 million bbl. In 2007, Pertamina produced 226.1 million bbl of fuels and imported 138.7 million bbl.

However, despite the need for new refining capacity, officials earlier this week said that Pertamina has no plan to import diesel oil and kerosine this year under the firm's public service obligation (PSO) as production by its own refineries would be sufficient.

On Feb. 11, the director general of oil and gas of the ministry of energy and mineral resources, Evita Legowo, told a meeting of the Energy Commission of the House of Representatives that Pertamina would import only premium gasoline this year.

She said that premium gasoline consumption under the PSO this year had been set at 123.856 million bbl, while the refineries could produce only 68.35 million bbl, leaving Pertamina to import 55.506 million bbl.

Last week, in a bid to boost the country's production, a state official said that Royal Dutch Shell PLC could improve its chances of participating in the Natuna D-Alpha Block by transferring its oil refining operations to Indonesia from Singapore (OGJ Online, Feb. 10, 2009).

Contact Eric Watkins at hippalus@yahoo.com.

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