Feasibility study on Indonesia's third new refinery to conclude next year

Singapore (Platts)--31Oct2013/332 am EDT/732 GMT

The Indonesian government's plan to fully fund a new refinery is still on, with the feasibility study for the project likely to be concluded by next year, an official at the Ministry of Energy and Mineral Resources said Thursday. The 300,000 b/d refinery will be integrated with a petrochemical complex and is expected to come onstream by 2021, Yusef K Caryana, deputy director of oil and gas storage and business development at the ministry said at the Downstream Asia conference in Singapore. Caryana said there had been no decision on the location of the refinery, although a probable site was East Java. Front-end engineering and design is slated for the 2015-16 period and state-owned Pertamina will operate the project. Pertamina currently owns and operates seven oil refineries with a total capacity of 1.05 million b/d. However, that is not enough to meet the country's total refined products demand of 1.3 million b/d, and the company imports oil products on term and spot basis to supplement its own production. The new refinery is in addition to two other greenfield projects being planned by Pertamina, each with 300,000 b/d capacity as well. One facility in Tuban was to involve Saudi Aramco while the second, called Balongan II, was to have Kuwait Petroleum and South Korea's SK Energy as partners. Those partnerships have, however, run into difficulty after the country's finance ministry determined that the foreign companies had asked for too many financial incentives, Platts reported earlier. Consequently, Pertamina said in August that it would issue international tenders for the construction of both refineries to decide if the incentives offered for the projects were in line with expectations. Caryana reiterated that the foreign companies are still involved in the projects and the targeted start for the Balongan II facility is 2018. 'We hope to have the three refineries onstream by 2021 and this will reduce our supply deficit,' he added. By 2015, Indonesia's total fuel demand is expected to reach 1.29 million b/d, up from 1.11 million b/d in 2011. Domestic supply however, is only expected at 719,000 b/d by 2015, creating a shortfall of 575,000 b/d. With the new refineries, domestic supply of fuel is expected to rise to 1.75 million b/d by 2025, shrinking the fuel shortfall to 162,000 b/d, according to data from Caryana.--Song Yen Ling, yenling.song@platts.com --Edited by Haripriya Banerjee, haripriya.banerjee@platts.com