Presidential regulation on fuel refinery to be issued

By Febry Silaban

Coordinating Minister for the Economy Darmin Nasution said that a presidential regulation will be issued to help accelerate the development of fuel refineries in the country.

The acceleration of fuel refinery projects forms part of the latest economic package announced by the government on Monday.

Darmin said that accelerating the development of fuel refinery in the country is crucial to help meet growing fuel demand at home particularly from the transportation sector and to reduce reliance on import.

He said that the gap between consumption and domestic supply is projected to reach 1.2-1.9 million barrels per day by 2025 if no new refinery capacity is added.

Darmin said that for the past 21 years, no new fuel refinery has been developed. The last was the construction of Balongan refinery in 1994 with capacity currently stands at 125,000 bpd. He said that to help reduce the gap, new refineries each with capacity of 300,000 bpd must be developed.

He explained that the presidential regulation on the acceleration of fuel refinery project among others regulates that the fuel refinery projects must used the latest technology, meet environmental standards, and prioritize the use of local content. He added that it would also regulate the required incentives for fuel refinery projects. ?The construction and development of fuel refinery will be integrated with petrochemical if possible,? he said.

Aside from developing new fuel refineries, the government will also increase (upgrade) the capacity of existing refineries. The government projects oil fuel production to increase from the current 825,000 bpd to 1.9 million bpd by 2025.

Darmin said that there are at least four refineries which need upgrade including in Cilacap, Balikpapan, Balongan, and Dumai. Meanwhile, new refineries will be built in Bontang (East Kalimantan) and Tuban (East Java).

Editing by Reiner Simanjuntak