COUNTRY PROFILE: Kuwait

ADVERTORIAL

Hemoco's oil refinery project in Selayar Island makes significant progress

The development of the Hemoco International Oil Refinery Project in Selayar Island, South Sulawesi, has entered a crucial stage.

In January, the management of Hemoco appointed international financial institution ABN AMRO Bank NV as its financial advisor. The selection of ABN AMRO Bank was due to the bank's expertise in advising the oil and gas sector in the region and internationally. The official appointment was made in Kuwait City, State of Kuwait, earlier this month.

During the visit by the management to Kuwait City and ABN AMRO Bank NV, a kick-off meeting was also held between the management of Hemoco and ABN AMRO Bank NV representatives from Jakarta, the Middle East and Singapore, the potential supplier of the crude, a major oil producer in the middle east, and a potential off-take company with an international reputation from the UK.

Following the results of the advisory work to be carried out by ABN AMRO Bank, the management will progress to the front engineering design state and select an Engineering Procurement Contractor (EPC) before the end of 2003.

The construction, which is expected to commence in 2004, is expected to be completed by the end of 2007 at the earliest, commensurate with the plant's initial commercial production.

The signing ceremony for the appointment of ABN AMRO Bank NV as the financial advisor for Hemoco's Grass Root Oil Refinery Project in Selayar Island, South Sulawesi, was held at the Indonesian Embassy in Kuwait on January 16.

Hemoco Selayar International was represented at the signing ceremony by Dr. Homoud Al Rqobah, Vice Chairman of Hemoco, and Muchsin Alwy, President and CEO of Hemoco, while ABN AMRO Bank NV was represented by Eddy Soeparno, Group Vice President for integrated energy in Indonesia, and Bruce MacFarlane, Senior Vice President, Project Finance And Structured Debt Asia.

Hemoco was established under the Indonesian Foreign Investment Scheme in 1996. The initial capacity of the integrated oil refinery and petrochemical project will be 150,000 barrels per day (BPD) in the first phase, to be increased to 225,000 barrels per day. Products will include Middle Distillates (kerosene, motor, and diesel fuel).

The holding the ceremony signifies the advancing of the project to the next phase of the development after the preparatory stage in Kuwait was recently concluded, with the financial advisor, potential off-taker (buyer) and the crude oil supplies having been identified.

New Challenge for Indonesia: Attractive investment scheme required

The Ambassador of the Republic of Indonesia to Kuwait, Hadromi Nakim, states that "Indonesia must be competitive in attracting worldwide investors to invest in Indonesia, especially from the Middle Eastern countries, who have the potential to become the new emerging investors in Indonesia and to extend regionally into the rest of Asia.

Indonesia, moreover, must provide attractive incentives for investors to accelerate the recovery of the Indonesian economy. Furthermore, he stated that "In this regard, the active role of the Indonesian Embassy in Kuwait is needed to encourage the investors to come to Indonesia".

Hemoco is the first of such investment, and it is hoped that it will be followed by many more small, medium and large investors from Kuwait. Therefore, Hemoco's success is very important, as Ambassador Nakim pointed out during the signing ceremony between Hemoco and ABN AMRO BANK NV as the Financial Advisor of Hemoco in developing this prestigious project.

With the signing of the contract, he is optimistic that the relationship between Kuwait and Indonesia at both the governmental and private sector levels will further expand, strengthen and deepen.

In essence, this signing represents our collaboration being put into practice and translates as a potential business coming to fruition.

Hemoco represents a Kuwaiti strategic interest in Indonesia and the region.

Dr Homoud Al Rqobah, the Vice Chairman of Hemoco, stated that "Indonesia with its huge population and rich natural resources and its strategic location remains one of the most important Asian countries. It will continue to be promising and a sound investment destination in the long run".

"We believe that penetrating the Indonesian market at this moment, of course, requires an extra effort, especially as regards the mobilizing of funds, but we remain confident that the equity required can be supplied from Kuwait as well as from within the Gulf Region. With the growth of demand for refined products on the back of a rise in economic development in the region, the Hemoco Oil Refinery Project is considered a sound investment, especially as Indonesia currently imports refined products to meet 20 percent of the national shortfall in supply. Thus, we believe that Hemoco is a strategic investment for Kuwaitis to secure and increase their oil market share in Indonesia and regionally. We, as Kuwaitis, need to seriously consider further strengthening our presence in the fourth biggest country in the world, population-wise, and the biggest Islamic Country in the world."

Dr. Mohammed Y. Iqneibi, Executive Vice President of Hemoco, said that despite the economic and political reforms in Indonesia and the region during what was regarded as a transitional period by many, in the long term Indonesia should regain its former importance. And he hopes "that the Indonesian government will encourage new investment to help the country emerge from the economic crisis". He also said that the Kuwaiti investors remained committed to realizing the Hemoco project in the near future provided there was warm welcome by making investment attractive to the private sector and the provision of incentives.

"We are also confident that incentives such as a Tax Holiday, as suggested by the Ambassador, will be provided by the Indonesian government," he said.

He added that God willing, Hemoco would continue to press ahead with the oil refinery project in 2004.

Muchsin Alwy, President and CEO of Hemoco Selayar International Oil Refinery, the Indonesia partner in the project, also suggested that an attractive incentive scheme should be made available and that the government should be more pro active in encouraging new investors to come to Indonesia.

Cooperation between the government and the business community had to be improved so that the two sides could help each other in overcoming the country's economic crisis.

"Hemoco will be moving steadily despite the challenging situation Indonesia faces at present, but Alhamdulillah (praise to be to God), the progress we have made to date is as expected although a great deal of home work still needs to be done. And hopefully, the situation in Indonesia and the World, which we are confident will improve in the near future, will be conducive for building on the already positive progress achieved by Hemoco.