Balongan refinery project to start in 2012

State oil company PT Pertamina and Kuwait Petroleum Company will start the development of the US$8 billion refinery and petrochemical facility in Balongan next year as a feasibility study and discussion on its tax incentive scheme are nearing end.

Industry Minister M.S. Hidayat said that as Indonesia was in dire need of such facility, the government was supporting Pertamina in its negotiations with the Kuwait Petroleum Company, which will also supply crude oil for the facility. "The negotiation is nearing completion and so is the feasibility study for the project. What's left to do is a discussion with Chairman of Investment Coordinating Board (BKPM)and Finence Minister (Agus Martowardoyo) on tax policy for the project," Hidayat said.

The Balongan refinery, designed to process 200,000 to 300,000 barrels of crude oil per day, is planned to fulfill domestic demand for oil products, including dozens of petrochemical's downstream product lines.

BKPM Chairman Gita Wirjawan confirmed that his agency had been intensively conducting meetings with Industry Ministry and Finance Ministry to speed up the development of the project, including the availability of tax incentives for such strategic project as well as tax holiday in accordance with Government Regulation No 62/2008. (*)