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Indonesia eyes crude oil imports from Iran amid refining expansion plans

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Indonesia eyes crude oil imports from Iran amid refining expansion plans


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Jakarta — Indonesia is seeking crude supplies from Iran to meet its demand which is expected to rise significantly should the Southeast Asian nation's refinery expansion plans materialize.

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"Indonesian energy minister Sudirman Said met with Iran's oil minister Bijan Namdar Zangeneh last week. We [Indonesia and Iran] agreed on two things -- Indonesia to buy Iranian crude and Iran allows Indonesia to participate in upstream business there," Dadan Kusdiana, spokesman at the energy and mines ministry said Thursday.

The crude volume that Indonesia is looking to import from Iran has not been decided yet, Kusdiana said.

Both countries have agreed to cooperate in the upstream sector and Indonesia is also considering cooperating with Iran in engineering and technical services, especially for refineries and storage facilities, he said.

Indonesia's crude imports from Iran are not conditional on sanctions getting lifted.

"The existing sanctions have some exceptions and some countries have been [importing crude from] Iran despite the sanctions."

An Iranian delegation is expected to visit Indonesia next month to discuss payment issues given that Iran is still under sanctions, the spokesman said, adding that the energy ministry has already initiated talks with Indonesia's central bank, Bank Indonesia.

Indonesia and Iran will also discuss the crude specs when the delegation visits, he said.


Indonesia earlier this month launched an ambitious plan to build four refineries, each with capacities ranging between 300,000 b/d and 350,000 b/d, to cut its dependency on oil product imports.

This follows agreements signed in December 2014 between the country's state-owned oil and gas company Pertamina and three of the world's largest refining companies -- Saudi Aramco, Sinopec and JX Nippon Oil and Energy -- to expand and upgrade four of its refineries.

Pertamina currently has a total refining capacity of 1.04 million b/d, but typically runs at 820,000 b/d as its refineries are very old.

The upgrade and expansion will take total capacity to 1.68 million b/d by 2022.

Indonesia currently produces a little over 800,000 b/d of crude oil, meaning the country will need around 2 million b/d of crude oil imports if the expansion and greenfield plants come onstream, assuming the four new refineries have capacity of 300,000 b/d each.

Indonesia is expected to import around 300,500 b/d of crude oil this year, Pertamina had said earlier.

Indonesia is the region's largest importer of gasoil and gasoline.

It typically imports 9 million-10 million barrels of gasoline and 2.5 million-3.5 million barrels of gasoil every month.

With an oil demand growth potential of 6% per year going forward, the country has been seen as a big target market for the South Korean, Indian and Singapore refiners.

--Anita Nugraha,
--Mriganka Jaipuriyar,
--Edited by Irene Tang,