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Indonesia allows private companies to build domestic refineries

Jakarta — The Indonesian government has issued a new regulation allowing private companies to build and operate domestic refineries with the aim of accelerating construction of new projects and cutting Indonesia's dependency on fuel imports, a government official told S&P Global Platts late Monday.

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Under a decree issued November 10, private companies can now import crude or condensate to meet their refining needs and can export refined products if domestic needs have been met.

They will also be able to sell their products on the retail market and will be appointed to distribute subsidized fuel by the government, energy and mines ministry spokesman Sujatmiko said.

Indonesia still appoints some companies, besides state-owned Pertamina, to distribute fuel throughout Indonesia.



Separately, the government plans to invite bids on new mini-refinery in Maluku, in the eastern part of Indonesia, this year.

About three to five investors have expressed interest in participating in the tender, oil and gas director general I Gusti Wiratmaja Puja said on the directorate general's website.

Maluku is an area estimated to have about 3,000-3,500 b/d of crude that could be refined at the proposed refinery, Puja said.

The government will also invite bids for other locations next year, Puja said.

The Maluku mini-refinery project is one of eight small-scale oil refineries for which the government is slated to invite bids, with all eight being built near oil blocks.

The capacities of the proposed refineries are expected to be between 6,000 b/d and 20,000 b/d.

The government has said it believes transporting crude from the oil blocks in a remote area to floating storage and then on to the refineries is much more expensive than bringing the crude directly to the proposed refineries near the oil blocks for processing.

Pertamina owns and operates seven oil refineries with a total installed capacity of 1.05 million b/d. However, that is not enough to meet refined product demand of 1.5 million-1.6 million b/d, and the company imports oil products on a term and spot basis to supplement its own production.

Indonesia also plans to build four refineries between 2020 and 2025 with capacities of 300,000-350,000 b/d as part of the government's effort to cut its dependency on crude and product imports.

--Anita Nugraha, newsdesk@spglobal.com
--Edited by Jonathan Fox, jonathan.fox@spglobal.com