Shell, Aramco May Build Indonesia Plant, Hidayat Says

Royal Dutch Shell Plc, Europe’s largest oil producer, may build a refinery in Indonesia even as National Iranian Oil Co. scrapped a similar plan, Industry Minister Mohamad Hidayat said.

Shell may team up with Saudi Arabian Oil Co. and PT Pertamina to build the refinery in Tuban in the province of East Java, Hidayat told reporters in Jakarta today after meeting executives from a unit of Shell. 

Darwin Silalahi, head of Shell’s Indonesian unit, and Budiman Moerdijat, a spokesman, didn’t respond to two phone calls and mobile text messages. A Dharan-based spokesman for Saudi Aramco declined to comment when contacted by telephone. 

“The government is preparing a fiscal policy to help attract investors, including for the Aramco project,” Hidayat said. Pertamina will act as an agent to market fuels from the Tuban refinery, he said. 

Indonesia wants to boost investments in refineries to reduce the nation’s dependence on imports of oil products. Consumption of subsidized fuel may rise 6 percent this year to 42.5 million kiloliters because of an increase in vehicle sales, Djaelani Sutomo, marketing director at Pertamina, said in June. 

Indonesia, Southeast Asia’s biggest crude oil producer, imports diesel, gasoline and jet fuel because its refining capacity lags behind consumption.

Refinery Expansion

Pertamina, Indonesia’s state oil company, will agree this year with Saudi Aramco on the development of a $5 billion refinery project, Karen Agustiawan, president director of Pertamina, said Dec. 6. The plant will have a capacity of as much as 300,000 barrels a day, she said. 

Pertamina will also sign a $5 billion accord with Kuwait Petroleum Corp. to expand the Balongan refinery in West Java by as much as 300,000 barrels a day, Agustiawan said. The plant has a capacity of 125,000 barrels a day, according to data compiled by Bloomberg.

“Kuwait Petroleum has performed a feasibility study and in August they will start construction,” Hidayat said today. 

Iranian Oil may cancel a plan to build a refinery because of a disagreement on the price of the crude oil supply, he added. Pertamina and Iranian Oil had planned to build a refinery in western Java with a daily capacity of 150,000 barrels of oil in 2014, Priyo Utomo, then senior vice president at Pertamina, said in July 2009. Source: Bloomberg