Indonesia seeks Iraq refinery investment

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pertaminaIndonesia, a main importer of crude oil and its refined products in Southeast Asia, is likely to partner with Iraq, one of the world’s largest petroleum producers, to build local oil refineries in a bid to meet domestic needs, the Jakarta Post revealed on May 4.

The two countries recently have signed several energy partnerships, including cooperation in the downstream sector, according to the Energy and Mineral Resources Ministry’s director general for oil and gas, Edy Hermantoro.

“The door is open for both national oil and gas companies to form a business-to-business partnership,” Hermantoro said, referring to Indonesia’s state-owned oil and gas company PT Pertamina and the Iraq National Oil Company.

Earlier, the Indonesian Finance Ministry has been considering whether to give incentives to Saudi Aramco and Kuwait Petroleum for refineries that the firms want to build with Pertamina.

Requiring a combined investment of around $20 billion, the proposed refineries would each have a production capacity of 300,000 barrels per day when complete. However, the firms wanted the import duty for their oil supply waived, rejecting the idea of other producers supplying crude oil to the fuel refineries, which have been slated to begin operation in 2018.

The demands from both foreign firms have been the subject of review by the Finance Ministry, which is expected to reach conclusion in June 2013. Meanwhile, it reportedly wants persuade Iraq to invest in building local refineries.

Perceptions among oil and gas firms have been that the sizable investment needed for refineries would not meet the desired internal rate of return of around 10 per cent. Indonesia has not built a new refinery since 1994, when Pertamina constructed a refinery in Balongan, West Java, under Suharto.

 

 

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Reading Time: 2 minutes

Indonesia, a main importer of crude oil and its refined products in Southeast Asia, is likely to partner with Iraq, one of the world’s largest petroleum producers, to build local oil refineries in a bid to meet domestic needs, the Jakarta Post revealed on May 4.

Reading Time: 2 minutes

pertaminaIndonesia, a main importer of crude oil and its refined products in Southeast Asia, is likely to partner with Iraq, one of the world’s largest petroleum producers, to build local oil refineries in a bid to meet domestic needs, the Jakarta Post revealed on May 4.

The two countries recently have signed several energy partnerships, including cooperation in the downstream sector, according to the Energy and Mineral Resources Ministry’s director general for oil and gas, Edy Hermantoro.

“The door is open for both national oil and gas companies to form a business-to-business partnership,” Hermantoro said, referring to Indonesia’s state-owned oil and gas company PT Pertamina and the Iraq National Oil Company.

Earlier, the Indonesian Finance Ministry has been considering whether to give incentives to Saudi Aramco and Kuwait Petroleum for refineries that the firms want to build with Pertamina.

Requiring a combined investment of around $20 billion, the proposed refineries would each have a production capacity of 300,000 barrels per day when complete. However, the firms wanted the import duty for their oil supply waived, rejecting the idea of other producers supplying crude oil to the fuel refineries, which have been slated to begin operation in 2018.

The demands from both foreign firms have been the subject of review by the Finance Ministry, which is expected to reach conclusion in June 2013. Meanwhile, it reportedly wants persuade Iraq to invest in building local refineries.

Perceptions among oil and gas firms have been that the sizable investment needed for refineries would not meet the desired internal rate of return of around 10 per cent. Indonesia has not built a new refinery since 1994, when Pertamina constructed a refinery in Balongan, West Java, under Suharto.

 

 

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