"Pertamina knows all about the specifications of refinery and types of oil products."Jakarta (ANTARA News) - The government has told state oil and gas company PT Pertamina to build an oil refinery with a processing capacity of 300,000 barrels of crude oil per day.
The project to cost around Ro90 trillion (US$9.7 billion) will be financed with fund from the state budget, Oil and Gas Director General Edy Hermantoro said here on Tuesday.
The government will have a participating capital in the project, Edy said here on Tuesday.
Pertamina, which owns all six oil refineries in the country, has the competence and experience in building as well as in operating oil refineries, he added.
"Pertamina knows all about the specifications of refinery and types of oil products. Pertamina needs only to collaborate with us," he said.
The country needs more oil refineries to meet domestic demand for refined oil products including oil fuels. The country has been heavily depended on imports for oil fuels.
The government has failed to attract investors to build more oil refineries in the country .
Pertamina officials have said few investors are interested in oil refining industry as the profit margin is not attractive while the government is not ready to offer incentives.
Edy said his office has just held an internal meeting to discuss plan to build a new oil refinery.
He said Pertamina will first conduct feasibility study and prepare front-end engineering design of the project to be built integrated with petrochemical factory.
The government has set aside Rp250 billion through the state fund to finance feasibility study, he said.
Feasibility study will cover basic design, basic engineering design, front-end engineering design and final investment decision, he said.
Tender of engineering, procurement, and construction would follow after the feasibility study has been all wrapped up, he said.
Construction is expected to start in 2015-2016 to be completed in 2018, he added.
The project will be built on a land piece owned by Pertamina in South Sumatra either in Plaju-Sungai Gerong or Katimpa Bengkok.
Crude oil as feedstock for the oil refinery will be imported including from Iraq, Edy said.
Meanwhile the government has asked Pertamina to make a decision on the status of cooperation on oil refinery projects with Saudi Aramco and Kuwait Petroleum.
"Before June, there would be a decision," he said.
Pertamina plans to team up with Kuwait Petroleum Company to build a refinery project in Balongan, West Java, and with Saudi Aramco to build one in Tuban, East Java.
The two projects to cost each around US$9 billion are also expected to be operational in 2018.
Negotiations with the two Middle East oil giants on the projects have dragged on for years over incentives.
Currently Pertamina with six refineries has a processing capacity of 1.031 million barrels of crude oil per day.
The six refineries include one in Dumai, Riau with a processing capacity of 170,000 barrels of crude oil, Plaju, South Sumatra with a processing capacity of 118,000 barrels, Cilacap,Central Java with a processing capacity of 348,000 barrels, Balikpapan, East Kalimantan 260,000 barrels, Balongan, West Java 125,000 barrels, and Kasim , Papua Barat 10,000 barrels per day.
(Uu.H-ASG/F001)
Editor: Priyambodo RH
Copyright © ANTARA 2013
