Indonesia offers Saudi to invest in oil refineries

JAKARTA. Indonesia has offered Saudi Arabia the opportunity to invest in three more oil refineries — in Dumai, Riau; Balongan, West Java; and Bontang, East Kalimantan.

Previously, state-owned energy company Pertamina and Saudi Aramco signed an agreement to establish a joint venture to develop an oil refinery in Cilacap, Central Java.

“From the agreement, we will see investment worth US$6 billion [Rp 80.2 trillion],” Achmad Sigit Dwiwahjono, the Industry Ministry’s chemical industry and textiles director general, said in Jakarta as reported by tribunnews.com on Tuesday.

For the chemical industry sector, Indonesia hopes Saudi Arabia will invest between $3 billion and $4 billion, Achmad said.

He said if the offer to invest in three oil refineries was accepted by Saudi Arabia, Indonesia would be able to significantly increase oil production and create up to 10,000 jobs.

Meanwhile, the ministry’s oil and gas director general I Gusti Nyoman Wiradmadja Puja said the commitment to develop the oil refineries should be followed up regardless of whether there would be investors, as the country needed to increase oil production.

“For the investment of Saudi Aramco in the Cilacap refinery, it has been clear and it [has been discussed] for a long time,” said the official, adding that a decision was needed on whether the government would invite investors or handle the project itself.

Wiradmaja said the development of refineries was needed to reduce oil imports. He explained that domestic demand for oil reached 1.6 million barrels per day, while the capacity of Indonesian refineries was only 800,000 barrels per day. (bbn)