Indonesia evaluating locations for a new refinery
Monday, July 29 2013 - 06:50 AM WIB
To realize the development of a refinery with the state budget, the Indonesian government is currently working on drafting a presidential decree and conducting an evaluation of its possible locations, while the state oil and gas company PT Pertamina is conducting the feasibility study on the refinery, a senior official said.
Umi Asngadah, the director of upstream at the energy and mineral resources ministry, said in Jakarta on Monday that in evaluating the possible locations, the ministry is assisted by a team from Bandung Institute of Technology (ITB). ?The location should meet the economical and technical criteria. From the aspect of economy, the location should be located in Java island which is the largest market of oil fuels (BBM) to be produced by the refinery,? she told petromindo.com in Jakarta on Monday.
From the technical perspective, it should be located on a coastal area with the sea having depth of at least 30 meter. In Indonesia, only ten locations meet the criteria. The ten locations are Tanara (Serang), Lawe-lawe (East Kalimantan), Plaju (South Sumatra), Bontang, Pasuruan, Balongan, and Banyuwangi. ?But this is still our proposal based on the study conducted by ITB. The final decision will be up to the minister of energy and mineral resources,? she said.
The Indonesian government has decided to develop a new refinery using the state fund as there is no company interested in developing the refinery due to its very small margin and no appropriate incentives from the government. The refinery will have a production capacity of 300,000 bpd and the total investment needed at Rp 90 trillion.
Umi said that her ministry can only provide a license to process crude oil into fuel (BBM). In other countries, refineries also produce petro-chemical products, such as methanol, and poly-ethylene, thus better margins are possible. But here for a refinery to also produce petrochemical products, a separate license from the ministry of industry is needed which could entail a much longer licensing process.
Editing by Benget Besalicto ST