Two refineries proposed for Indonesia's Batam Island

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Apr. 30 -- Indonesia's Setdco Group and its partner PT Intan Megah have sought permission to build a 300,000 b/d refinery at Tanjung Sauh on Batam Island near Singapore—one of two new facilities apparently set for construction on the island.

"The crude oil will be from the Middle East," said Evita Legowo, director general for oil and gas at the Ministry of Energy and Mineral Resources. She said the government is still in the process of issuing a permit for the development of the planned refinery, and could release no further details.

Meanwhile, other reports have emerged that Gulf Petroleum Ltd., Qatar's largest oil company, also plans to build a refinery in Batam.

Gulf Petroleum is preparing documents needed to seek the investment license from the Indonesian government, according to Ismeth Abdullah, chairman of the Batam Free Trade Zone Council.

Gulf Petroleum Pres. Abdul Aziz Abdulaimi and PT Batam Sentralindo Pres. Bang Hawana recently signed a memorandum of understanding on the project.

PT Batam Sentralindo, the operator of the Batam Free Trade Zone, has agreed to provide a 250-hectare plot of land for the refinery project, which plans to sell its products in Indonesia and other Southeast Asian nations.

Meanwhile, reports said that a $1.5 billion refinery joint venture between Indonesia's state-owned PT Pertamina and Japan's Mitsui & Co. may stall because the Indonesian government wants an increased stake in the project.

Agreement had been reached to build a residue fluid catalytic cracking unit with a capacity of 60,000 b/d of gasoline in Pertamina's existing refinery at Cilacap in Central Java, with Mitsui holding an 80% stake and Pertamina 20%.

But the Indonesian government has advised Pertamina to review the project and seek a higher stake, a request that could sink the project altogether according to one source, who said financing for the refinery already has been approved by the Japan Bank for International Cooperation.

Contact Eric Watkins at hippalus@yahoo.com.

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