Energy ministry to study possibility for refinery to be financed by state

The energy and mineral resources ministry is seeking possibility that the state would finance the development of refineries in order to meet growing demand for fuel, director general for oil and gas Evita H. Legowo said.

Evita said since 1998, out of a number of permits issued to build oil refineries, only few have been realized, such as small refineries owned by Tri Wahana Universal in Bojonegoro, East Java which produces 6000 barrels of oil per day and small Muba refinery in Musi Banyuasin, South Sumatera which process around 800 barrels of oil per day.

Evita said the development of refineries are vital in order to meet growing domestic fuel demand and reducing dependence on imported processed fuel. She said about only half of domestic fuel consumption comes from domestic refineries,while the rest is imported.

?We (the government) have been trying to push for development of new refineries, however it is very difficult. We need new refineries to meet domestic demand for raw and processed fuel,? said Evita.

A number of potential investors have expressed interest to build refineries however so far such plans are yet to be realized.

Evita said the funds needed to build one refinery is about Rp50 trillion.

Evita said such model ? state finances refineries development ? has been applied by India. India imported crude oil, but then it manages to export various petroleum products and processed fuel. Evita said she will discuss the idea with the newly appointed energy minister Jero Wacik.

?We only need to find a partner to supply crude oil,? she said.

The last major refinery built in Indonesia was Balongan refinery, which was built in 1994. The refinery has been profitable. Most major refineries were built in 1970s, when Indonesia were experiencing oil boom. (romel)