Elnusa to build $2.5b-$3b refinery

The Jakarta Post, Jakarta

A subsidiary of state oil and gas firm PT Pertamina, PT Elnusa Harapan, is studying the possibility of building a refinery with a capacity of 300,000 barrels per day.

The refinery, which would be expected to start producing within four years, would cost between US$2.5 billion and $3 billion, Elnusa president director Rudy Radjab was quoted as saying by Detik on Wednesday.

Rudy said two-thirds of the fuel products from the refinery would be exported to China, while the rest would be used to meet domestic demand.

"We have signed contracts with Sinopec and CNPC," Rudy was quoted as saying, referring to the China Petroleum & Chemical Corp. and the China National Petroleum Company.

The refinery would process some 100,000 barrels per day of very heavy crude from Iran.

It is unclear from where the refinery would receive the rest of the crude.

Rudy said the company would conduct a preliminary feasibility study in the next two months and a more comprehensive one next year.

Among the possible locations for the refinery are Banten, Central Java and Riau.

The Ministry of Energy and Mineral Resources' director of oil and gas, Erie Soedarmo, said Elnusa had yet to submit a license application for the refinery.

"They need to provide data on the financing and location to get a permit," said Erie.

Indonesia will open the downstream oil and gas market to private investors in late November, after Pertamina's monopoly in the sector officially ends.

According to data from the energy ministry, PT Intanjaya Agromegah and PT Berkah Refinerindo Utama have secured principal licenses to build refineries capable of processing 300,000 barrels per day (bpd), in Parepare, South Sulawesi, and another in Trenggalek, East Java, respectively.

Applications from seven other companies are currently under evaluation. Also, a refinery with a capacity of 800 bpd in Musibanyuasin, South Sumatra is under construction.

Pertamina also plans to build a refinery with a capacity of up to 200,000 barrels per day in Tuban, East Java.

That refinery, to be constructed in cooperation with Sinopec, will be used to process crude produced by the untapped oil-rich Cepu block, located on the border between East Java and Central Java.