The Banten provincial government has signed a preliminary agreement with PT Elnusa to build a major oil refinery at an estimated cost of Rp 5 trillion (US$550 million), as well as an oil-storage tank farm, in the province.
The refinery, which is likely to be built at Bojonegara in Banten, will process heavy crude oil with a capacity of 300,000 barrels of refined products per day.
Eneng Nurcahyati, the head of Banten province's public relations department, confirmed the news Friday, while admitting that the venture was still only at the preliminary stage.
"We have not gone into the details yet. We have only been lining up commitments for optimizing the potential of oil and gas production in the province," Eneng said.
"The venture is currently still at the feasibility study stage. So, there's not much we can tell you so far," she explained.
Eneng said that Banten's governor, Ratu Atut Chosiyah, had met Wednesday with Elnusa president director Rudy Radjab in Jakarta, where the two inked a memorandum of understanding on the venture.
Banten province's official website, http://www.banten.go.id,
also quoted Atut as confirming the venture.
Atut said that the refinery was only one part of a long-term cooperation plan with Elnusa. Other proposals included the building of a major tank farm for storing petroleum products in the province. However, once again, no details were available.
"At the meeting, apart from discussing the development of the oil and gas sector, we also talked about the opportunities that our Bojonegara port has to offer," Eneng said.
The government is currently building a port at Bojonegara, which is expected to become Indonesia's largest port, potentially replacing Tanjung Priok Port in Jakarta.
Eneng said that the provincial government was still waiting for the approval of the central government before the venture with Elnusa could commence.
"Politically, we have to wait for the green light from the central government, as there could be foreign investors involved in similar projects," she said.
Elnusa, one of state oil and gas firm Pertamina's profitable subsidiaries, is a holding company for 14 business units operating in the oil and gas sector, both upstream and downstream, and in the information technology industry.
The company reported total revenues of Rp 1.5 trillion up to the beginning of last September, and expects the figure to hit Rp 1.7 trillion by the end of this year.
Elnusa has been striving to improve its profitability as it plans to launch an initial public offering in the near future after it gets the green light from its shareholders. The company also hopes to boost its annual revenue to Rp 6 trillion by 2009.