Kuwait firm seeks incentives to build new refinery
Saturday, April 23 2011 - 02:49 AM WIB
The refinery would be expected to have a total processing capacity of between 200,000 and 300,000 barrels of oil per day (bpd).
Director general for oil and gas at the Energy and Mineral Resources Ministry, Evita Herawati Legowo, told reporters Thursday that the company expected the decision on incentives could be issued early May at the latest.
?The company has been committed to the project, but is awaiting certainty on which incentives the government could provide,? she said after a meeting at the ministry.
She said the company had not yet revealed the total investment value, but it estimated that the new refinery could begin operating in 2015.
?In addition to Indonesia, the company has also invested in China and Vietnam. In these two countries, the construction of refineries has been started," Evita said.
?The company receives incentives in those countries, so it requests the same thing in Indonesia,? she added.
Evita said that the University of Indonesia, sponsored by the Finance Ministry, was currently studying options for the types of incentives the government could provide for investors.
Through its subsidiary, Kuwait Petroleum International, the company signed a memorandum of understanding (MoU) in August last year with state oil and gas firm PT Pertamina to conduct a feasibility study for building the refinery that would process crude from Kuwait Petroleum. The company and Pertamina have long teamed up in trading and upstream oil and gas businesses.
Pertamina has six refineries across the country with a total processing capacity of 1.03 million bpd. The refineries are located in Dumai, Riau, with a capacity of 170,000 bpd, Plaju in South Sumatra (118,000 bpd), Cilacap in Central Java (348,000 bpd), Balikpapan in East Kalimantan (260,000 bpd), Balongan in West Java (125,000 bpd) and Kasim in West Papua (10,000 bpd).
The six refineries produce 40.6 million kiloliters of fuels comprising 18.3 million kiloliters of diesel fuel, 12 million kiloliters of premium gasoline, 7 million kiloliters of kerosene and, 3.3 million kiloliters of aviation fuel.
The government currently only provides import duty exemptions for refinery developers. The incentive is apparently not attractive enough for investors, leading to a 10-year lull in building new refineries in the country.
In February 2011, the Industry Ministry said the National Iranian Oil Refining and Distribution Company (NIORDC) plan to build a refinery in Bojonegara, Banten, had been canceled due to several ?political problems?.
Indonesia is in dire need of new refineries because current capacity cannot meet domestic market demand.
The country needs around 50.1 million kiloliters of fuels a year, comprising 22.1 million kiloliters of premium gasoline, 21.2 million kiloliters diesel fuel, 3.8 million kiloliters kerosene and 3.1 million kiloliters aviation fuel. (*)