Govt offers incentives for private investors to build refinery

The government offers incentives for private investors willing to build refineries in Indonesia. The incentives are similar to the one promised to the refinery project to be jointly built by the government and a private company in Bontang, East Kalimantan, Director General of Oil and Gas A. Edy Hermantoro.

In the press release obtained on Wednesday. Edy did not specify the types of incentives to be provided for the investor.

He noted however that different form the Bontang refinery project in which the government will provide 900 ha of lands for the project, the investor of the privately-owned refinery project should appropriate lands for their project themselves.

He said Indonesia needs two new refineries each with the capacity of 300,000 bpd to fullfill the national oil fuel demand. The national oil fuel market is now experiencing a shortage of 608,000 bpd. Indonesian refineries, mostly owned by state owned oil and gas firm PT Pertamina, have combined installed capacity of 1.157 million bpd, while crude oil available domestically for processing amount to 649,000 bpd. Meanwhile, the national oil fuel demand is estimated at 1.257 million bpd.

Next year, the amount of crude available domestically for processing is estimated at 719,000 bpd, while the national oil fuel demand is estimated to increase to 1.359 million bpd. There will be an oil fuel deficit of 640,000 bpd.

Editing by Johannes Simbolon