RI seals oil-import commitment from Iraq

JAKARTA. Indonesia has secured a commitment from Iraq to supply of crude oil to three new refineries with a total individual production capacity of 300,000 barrels per day (bpd), said the Energy and Mineral Resources Ministry’s director general for oil and gas, Evita Herawati Legowo.

“PT Pertamina will discuss with Iraq about the import plan. If we build three refineries, it means we’re going to need 900,000 bpd of crude oil. Iraq is ready to supply not only that amount but also an addition of other petrochemical products,” she said after a bilateral meeting between Indonesia and Iraq in Jakarta on Wednesday.

Iraq’s readiness to become a supplier, she continued, would pave the way for the government to set up the refineries with its own budget. Previously, the plan was in limbo since the prerequisite for establishing a refinery was that there should be a sufficient and sustainable crude oil supply to support the refinery’s operation, she added.

“The most important thing is that the two governments have agreed to the import plan; now the discussion can be brought to the business-to-business level,” Evita said.

“In four to five years from now, Iraq’s oil production will jump to 10 million bpd [from 3 million bpd now]. The country says it’s ready to supply as much as we need. The first imports may begin in the first half of next year,” she revealed.

As reported earlier, the government will set aside Rp 1 trillion (US$105.7 million) from next year’s state budget to prepare for the construction of the new refineries. The money will be used to conduct a comprehensive study of the best locations for the refineries and how to secure a sustainable supply of crude oil.

Iraqi Deputy Prime Minister for Energy Hussain Al-Shahristani said Indonesia could “depend on Iraq as a long-term dependable supplier of its energy needs”, particularly crude oil. Iraq could also supply natural-gas products, such as liquefied natural gas (LNG) and liquefied petroleum gas (LPG), if Indonesia was one day in need of them, he added.

“We can provide the Indonesian market with crude oil for their refineries, but we also want to import some agricultural products so the benefit is mutual,” he said.

Pertamina’s investment and risk-management director, Afdal Bahaudin, said that apart from the government, the company was optimistic to begin importing crude oil from Iraq this year.

“For the initial phase, we expect to get 50,000 bpd of crude first,” he reported.

He added that at follow-up talks at the government level, Pertamina would discuss the imports with the Iraqi oil trading company.

Pertamina currently operates six refineries, which are located in Balikpapan, East Kalimantan; Balongan, West Java; Cilacap, Central Java; Dumai, Riau; Kasim, West Papua; and Plaju, South Sumatra.

Last year, out of 900,000 bpd of crude processed in those refineries, 65 percent came from domestic producers, 13 percent was imported from Saudi Aramco and the remaining 22 percent was imported through Pertamina’s trading arm, Petral. (Rangga D. Fadillah/ The Jakarta Post)