Indonesia to build floating refinery in Natuna

The government will build a floating mine refinery on the northernmost part of the Natuna Island and will use oil from the East Natuna block as feedstock.

Director General of Oil and Gas IGN Wiratmaja said on Thursday the refinery which is planned with a capacity of 20,000 barrels of oil per day, is estimated to cost Rp 250 billion to develop. If realized, Indonesia will be the first country in the world to have a mid-sea mini refinery.

East Natuna block is one of the richest blocks ever discovered in Indonesia. The block is estimated to hold a gas reserve of 200 tcf. However, plans to develop the block have never been realized because the gas contained in the block has a high content of CO2, which makes it too costly to develop. Aside from gas, the block also contains oil.

The government now finds it urgent to develop the block in order to establish Indonesia?s sovereignty over Natuna Islands. China has claimed part of the marine area of the islands as their traditional fishing ground.

Wiratmaja said while East Natuna?s gas may take a long time to develop, the oil reserve of the block can be developed in the near future. The block can produce between 7,000 to 15,000 bpd of oil.

The mini refinery project will be first offered to investors. If none is willing to take the project, the government will develop it using state budget. ?The profit from building a refinery in the middle of the sea is small. Probably, no profit at all. The bigger a refinery, the bigger the profit,? he said.

He said the development of the refinery may take three years. It is thus scheduled to come onstream in 2019. Fuel produced from the refinery will be supplied to communities in Natuna Islands and the military. In the future, the refinery can also be used to process crude from other blocks in the region.

Editing by Johannes Simbolon