BED for a East Kalimantan refinery in progress

A Build Engineering Design (BED) is being made as part of the preparation for the planned development of a refinery in East Kalimantan, a senior official of the ministry of energy and mineral resources said.

The BED process is now in progress and will take one year to complete, Director General of Oil and Gas A. Edy Hermantoro said recently during a hearing with the budget commission of the House of Representatives.

He however did not specify when the making of the BED was started nor name agency or the organization assigned to make the BED.

He noted the BED is important to ensure that the configuration of the refinery will match with the crude supplies that it will receive.

The refinery will be built in Bontang on 900 ha of land owned by the Directorate General of State Assets. The technology is being prepared by state owned oil and gas firm PT Pertamina which will be the future operator of the refinery.

The refinery will need huge investment. As such, it will be developed by the government in cooperation with the private sector. In order to find investors, the government has made a road show to Singapore and the project has receive a relatively good response from the business community, he said.

?BKF (Badan Kebijakan Fiskal or Fiskal Policy Body of the Ministry of Finance) and the Ministry of Finance has offered fiscal facilities for the project which are good enough for investors,? he said.

The refinery will not only produce oil fuels such as kerosene, gasoline and aviation fuel, but also petrochemical products which are expected to generate good profit, he said.

?The project is important to strengthen the national energy resilience,? he said.

Crude for the refinery, which are estimated to amount to 300,000 barrels per day (bpd), is expected to be supplied from Iraq. The government offers an option that the investor of the refinery will also be responsible for the provision of the crude.

Edy explained that at present, the crude demand of Indonesian existing refineries amount to 1.1157 million bpd. Indonesian crude production which can be processed at local refineries amount to only 649,000 bpd. Meanwhile, the national oil fuel demand amounts to 1.257 million bpd. This means Indonesia has a oil fuel deficit of 608,000 bpd. To solve the problem, Indonesia needs to build at least two new refineries, according to Edy.

For the year 2015, the crude demand of Indonesian refineries is projected to reach 1.167 million bpd. The national oil production that can be processed by the refineries is projected to reach 719,000 bpd. Meanwhile, the national oil fuel demand is projected to reach 1.359 million bpd, which means the country will experience an oil fuel deficit of 640,000 bpd next year.

Of all the exiting refineries, the one in Balongan, West Java is the newest and the only one that is still profitable. It was built in 1994. The others were built in the 1970s and were barely profitable.

Editing by Johannes Simbolon