APPRI develops Indonesia's first private oil refinery

JAKARTA (JP): PT Asia Pacific Petroleum Refinery Indonesia (APPRI), partly owned by tycoon Bambang Trihatmodjo, started Tuesday the construction of the country's first private oil refinery in Situbondo, East Java.

The groundbreaking ceremony for the US$3.2 billion project was officiated by State Minister of Investment Sanyoto Sastrowardoyo.

Present at the ceremony were APPRI president commissioner Bambang, South Korea's Daelim Group president B.J. Kim (who is the project's co-owner), East Java Governor Basofi Soedirman and the president of the state-owned oil and gas company Pertamina, Faisal Abda'oe.

Several other ministers did not appear at the ceremony as scheduled, including Minister of Industry and Trade Tunky Ariwibowo, Minister of Mines and Energy I.B. Sudjana, Coordinating Minister for Production and Distribution Hartarto, and Minister of National Development Planning Ginandjar Kartasasmita.

According to Bambang, the project is 40 percent owned by PT Asia Pacific Petroleum Ltd., 10 percent by PT Kresna Tara and 50 percent by the Daelim Group.

Both Asia Pacific and Kresna Tara are 55 percent owned by Bambang, 15 percent by Bambang Riyadi Soegama, 15 percent by Pontjo Sutowo and 15 percent by another shareholder.

Bambang, who is President Soeharto's son, said the project was being developed on 550 hectares of land for four years and was expected to come on line by September 2001.

The refinery is designed to produce 300,000 barrels per day (bpd) of petroleum fuel, including 152,000 bpd of diesel oil, 20,000 bpd of naphta, 64,600 bpd of mogas, 64,000 bpd of kerosene and avtur, 3,600 bpd of petro coke and 4,600 bpd of liquid pressured gas (LPG).

Bambang said APPRI would sell all the diesel and LPG it produced -- accounting for 50 percent of the refinery's production -- to the domestic market through Pertamina, while the rest of its output would be exported through Daelim.

Bambang said the operation of the refinery would reduce Pertamina's imports of petroleum fuel and as such the country could save its foreign currency reserve by up to $1.2 billion each year.

Indonesia currently has eight refineries, all owned by Pertamina, with a combined capacity of 989,500 bpd.

According to data from Pertamina, domestic oil consumption grew by 6 percent to 50.19 million kiloliters in the 1996/1997 period -- 22.5 percent (11.34 million kiloliters) of which was imported.

Bambang said the project would be 30 percent financed through equity and 70 percent through borrowing. He also said that the consortium's financial advisor, the Bankers Trust Company of the United States, was negotiating for loans with the U.S. Exim bank, as well as other financial institutions in Canada, South Korea and Japan.

The consortium has chosen the Daelim Engineering Co. Ltd. of South Korea and the U.S. Webster Engineering Co. Ltd. as the engineering, procurement, construction (EPC) contractors for the project.

Sanyoto said his office has approved 14 refinery projects, but only APPRI have realized the investment.

He did not provide any details on the 13 other projects, except that only two projects -- APPRI's and the project owned by President Soeharto's half brother Probosutedjo -- required an investment of more than $3 billion. The others needed less investment. (jsk)