RI needs two additional new refineries

Indonesia ideally needs two additional oil refineries with a capacity of between 125,000-150,000 barrel per day because the existing seven refineries could not fulfill domestic fuel demand of around 50 million barrel per year particularly for the kerosene and diesel fuel type, according to director general of oil and gas Rachmat Soedibyo.

Rachmat said that one of the additional refineries should be located in such a way to back up the Balongan refinery, which went into trouble recently causing disruption in the supply of fuel to Jakarta and other areas in Java and Bali.

He said that several foreign investors including from Japan, Europe and the Middle East have expressed their interest to develop the oil refineries.

But he said that it was yet to be clear whether the investors would really realize their investment plans. He said that there were also previously around 20 investors also interested in building oil refineries but until now they had not realized their plans.

Rachmat said that one of the factor discouraging investors to invest in domestic oil refineries was the prohibition for the private sector to enter domestic fuel retail business. He said that the margin from refinery activity was not lucrative enough.

Separately, Minister of Mines and Energy Susilo Bambang Yudhoyono confirmed that several foreign investors had expressed interest to invest in domestic oil refineries.

"I have met with investors from Japan and they seem to be very enthusiast," he said. (*)