Indonesia will not limit production capacity and markets for private oil refineries: Energy minister

Indonesia will not limit production capacity and markets for private oil
refineries: Energy minister

Indonesia will not limit the production capacity and markets for oil
refineries private investors will build, under new rules its energy ministry
unveiled this week to boost energy infrastructure in Southeast Asia's
largest economy.

Allowing private investment in oil refineries is part of Indonesia's plan to
restore investor confidence and overhaul its creaking energy infrastructure
and analysts say it's a step in the right direction. The last new refinery
was completed in 1997.

Developers will also be allowed to distribute refined products domestically
or overseas, Oil and Gas Director General Wiratmaja Puja told reporters on
Thursday.

"They can import (crude) and can also export (products)," Puja said, but
added that a portion of products would still have to be allocated to the
domestic market.

Indonesia's fuel output has been hit by a lack of investment in its refining
sector, and it currently imports around half of the 1.6 million barrels of
fuel it consumes daily.

"It's a sign that the Indonesian government is willing to give in a little
bit more to encourage investment in the refining sector," said Den Syahril,
analyst at consultancy FGE.

"Projects have been stalled, delayed over disagreements on terms of
partnership. For now, I'm still quite sceptical whether we will see some
progress but it's a step in the right direction."

Refinery developers will not be required to sell their products to state
energy company Pertamina, Puja said, and they could choose other
distributors or sell their products independently.

Pertamina has a virtual monopoly of the local retail fuel market, accounting
for about 90 percent of fuel sold.

The new rules would also allow for the first time other companies to sell
RON88 gasoline, provided they have trading, distribution and storage permits
and approvals from the downstream regulator.

Currently, fuel sales of competing retailers Shell and Total have been
limited to more expensive products.

Pertamina operates seven refineries in Indonesia and is working to upgrade
four, including one in Cilacap, Central Java, partnering with Saudi Aramco .
But the project has not progressed as quickly as it had hoped.

Russia's Rosneft was picked in May to develop one of two greenfield
refineries Pertamina plans to build.

By 2023, Indonesia targets to double its fuel output to around 2 million bpd
and reduce costly fuel imports.

"Many investors have requested permits to invest in private refineries,"
Puja said, citing proposals for refineries with a crude processing capacity
of up to 300,000 barrels per day.

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Link to Original Article:
http://energy.economictimes.indiatimes.com/news/oil-and-gas/indonesia-will-n
ot-limit-production-capacity-and-markets-for-private-oil-refineries-energy-m
inister/55476614

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com