Mini refinery to cut cost at marginal oil fields

Director General of Oil and Gas at the Ministry of Energy and Mineral Resources IGN Wiratmaja Puja told lawmakers that the government?s plan to develop mini oil refineries in eight clusters is aimed at reducing transportation cost of marginal oil fields located far away from large refineries.

Speaking during a hearing with the House of Representatives Commission VII on energy and mining on Wednesday, Wiratmaja said that if mini refineries can be built near the marginal fields, and the fuel output distributed to nearby areas, it would drastically cut down transportation cost as the crude would not have to be processed at far away large refineries.

?This will improve the efficiency in the production cost of the marginal fields,? he said.

He pointed out as example that a mini refinery will be built at cluster VII in North Sumatra where a marginal field produces about 8,000 bpd of oil. If it can be processed at the mini refinery, the fuel output could be distributed to the local community at low cost.

Wiratmaja reiterated the government is planning to develop mini refineries at eight clusters including cluster I- North Sumatera (Rantau and Pangkalan Susu); cluster II-Selat Panjang Malaka (EMP Malacca Strait and Petroselat); cluster III-Riau (Tonga, Siak, Pendalian, Langgak, West Area, Kisaran); cluster IV-Jambi (Palmerah, Mengoepeh, Lemang and Karang Agung); cluster V-South Sumatera (Merangin II and Ariodamar); cluster VI- South Kalimantan (Tanjung); cluster VII-North Kalimantan (Bunyu, Sembakung, Mamburungan and Pamusian Juwata), cluster VIII-Maluku (Oseil and Bula).

Maximum capacity of the mini refinery will be 20,000 bpd, with estimated investment for each 10,000 bpd at Rp 2.5 trillion.

He said that the government will offer the projects to private investors, but if none is taken, state-owned oil and gas firm PT Pertamina will be assigned to develop the projects.

Editing by Reiner Simanjuntak