PT Mits to build oil refinery in Aceh and W. Nusa Tenggara

PT Mits Indonesia will invest a total of $2.8 billion to build two oil refineries in Aceh and West Nusa Tenggara provinces, according to a deputy chairman of the Investment Agency (BPM) for investment facilities and services,

Yus'an said that his office had received the proposal from Mits to build the two refineries and would soon give its approval to the proposal.

"We will give our approval to the new company on Thursday at the latest because we have got a recommendation from the director general of oil and gas (at the Ministry of Energy and Mineral Resources)," he said.

According to Yus'an, Mits Indonesia is totally a foreign joint venture, with Mayhill International Trading & Service Ltd. of Britain controlling 50 percent stake and an investor from United Arab Emirates controlling the remaining 50 percent.

He noted that Mits Indonesia would use its own capital to finance the two refineries, each would cost the company $1.4 billion, of which $988 million would be fixed capital, while $402 million would be working capital.

The two refineries would employ a total of 450 people. Each of them would need a total of 500 hectares. One on Weh island in Aceh, and the other one in Taliwang, West Nusa Tenggara. Each of them would process around 500,000 barrels of crude oil per day.

They will have an annual production capacity of 1.6 million metric tons of gasoline, 800,000 tons of jet fuels, 1.3 million tons of diesel oil and 800,000 metric tons of other products such as asphalt and residue. All fuel products would be exported to other countries, while other products, including asphalt and residue, would be sold in the domestic market.

Yus'an said that Mits would likely sell its fuel products into the domestic market as well when when a proposed oil and gas bill is implemented.

The bill, now awaiting ratification by the House of Representatives, will allow private entities, including foreign players, to do downstream business in the domestic market. (*)