Investors remain reluctant to invest in domestic refinery project
Monday, March 6 2017 - 02:00 AM WIB
Petromindo
Private investors remain reluctant to invest in domestic oil refinery projects despite the introduction of a new policy last year aimed at encouraging private investment in the sector.
Director General of Oil and Gas at the Ministry of Energy and Mineral Resources IGN Wiratmaja Puja said that since the issuance of Ministerial Regulation No 35/2016 on the development of oil refinery by the private sector no new application of permit for refinery project has been proposed. ?There has been no request for (new) permit (to develop refinery),? he said on Sunday as quoted by Kontan.
Wiratmaja added that out of the 24 permits for refinery projects which have been issued by the government, only one refinery, owned by PT Tri Wahana Universal in Bojonegoro, East Java, which has been in operation.
He said that the ministry has been in talks with other investors to push them to realize their planned refinery projects. One of them is PT Kreasindo Resources Indonesia, which plans to team up with National Iranian Oil Company, to develop a 300,000 bpd refinery in East Java. China? Sinopec has also announced plan to build a refinery in Batam, Riau Island Province, but has yet to realize the project.
Wiratmaja said that the investors probably needs more time to realize their planned refinery projects. He said that the aforementioned ministerial regulation provides incentives to private investors planning to develop domestic oil refinery as they will also be granted with license to be engaged in domestic distribution of fuel products and export once domestic demand has been fulfilled.
The government is determined to build new oil refineries to help reduce fuel import as existing refineries only have a combined capacity to produce 800,000 bpd of fuel products, compared to domestic demand of around 1.6 million bpd, which is projected to jump to 2.2 million bpd in 2022-2023.
Meanwhile, Kontan quoted Ahmad Wijaya of the Indonesian Chamber of Commerce and Industry (Kadin) as saying that investors need certainty of crude supply before realizing their oil refinery projects. (*)