Indonesia, Iran mull $8.4 billion refinery

KONFRONTASI - Indonesia says it will make a decision on jointly building an oil refinery with Iran amid rising consumption in the Southeast Asian country. 

The country plans to increase its refining capacity by 500,000 barrels per day (bpd) in the next seven years and Iran is on board to provide crude as a major OPEC producer.

The proposal is to build a 100,000-bpd processing facility on the main Java island, director-general of oil and gas at Indonesia’s Energy and Mineral Resources Ministry IGN Wiratmaja Puja said in Jakarta on Tuesday.

According to head of the joint Iran-Indonesia refinery’s board of directors Hassan Khosrojerdi, the project is estimated to take $8.4 billion to be complete over four or five years.

Iran is conducting a feasibility study and examining its economic viability, its Ministry of Petroleum said. Puja, quoted by Bloomberg, said the project is at the preliminary stage yet.

Indonesia is building four refineries, each with capacities ranging between 300,000 bpd and 350,000 bpd, to cut its dependency on oil product imports.

The country has recently rejoined the Organization of the Petroleum Exporting Countries. It currently imports 800,000 to 900,000 barrels per day of crude oil but officials have said there are higher potentials to go beyond this level.

Minister of Economic Affairs and Finance Ali Tayyebnia has said Iran can supply Indonesia with 200,000 bpd of crude oil.     

Indonesia’s state-owned Pertamina has said it will sign an agreement with the National Iranian Oil Company (NIOC) this month to develop two oil and gas blocks in Iran. 

Iran and Indonesia have stepped up their cooperation, with Pertamina signing a deal with NIOC in May to buy 600,000 tonnes of refrigerated liquefied petroleum gas (LPG).

Pertamina hopes to boost production from each block by 30,000 barrels per day as part of its upstream development plans.  

The company is planning to import one million barrels of Iranian Light crude oil in the third quarter of this year to test the grade at a refinery in Central Java.

Energy and Mineral Resources Minister Sudirman Said has said Indonesia was after long-term oil supply deals with Iran to meet its rising demand for crude as the country is expanding its refineries.[ptv]