JAKARTA (rambuenergy.com) – The Indonesian government is currently drafting a presidential regulation (Perpres) aiming at stimulating investors to develop much-needed oil refinery in the country.
Most of Indonesia’s last oil refinery are old and are incapable of meeting domestic oil needs. The current oil refineries owned and operated by Pertamina are only able to meet half of domestic demand and the remaining fuels are imported from abroad.
The government, Pertamina and investors alike have in the past only talked about developing new oil refineries, however, none have been realized. Some investors cancelled their plan as their demand for fiscal incentives were not approved by the government. President Joko Widodo government revives the plan and wants to push the development of new oil refineries in the country.
Director General for Oil and Gas at the Energy and Mineral Resources Ministry I.G.N. Wiratmaja said during a media gathering at the ministry on Monday that the Presidential Regulation will give legal foundation for investors to speed up the construction of oil refineries.
He said Indonesia needs at least 4 large new oil refineries in next 10 years with average capacity to produce 300,000 barrels a day.
“The hope is that by issuing this Presidential Regulation, we can speed up the development of refineries, therefore it will help strengthen the national energy security,” Wiratmaja said.
Under the proposed Presidential Regulation, the government allows four options to develop the refineries. Two options are most favorable, namely the government and investor jointly develop the refinery and the second option is mandating Pertamina to develop new oil refineries.
He said a number of investors have proposed to build refineries in certain areas, but he declined to mention the investors nor the locations.
The government plans to integrate petrochemical complex in the proposed new oil refineries compound.
The last refinery that was build by Pertamina was Balongan oil refinery which was developed in 1994. (*)