Hemoko: Designated to become a Center of Excellence
Hemoko: Designated to become a Center of Excellence
Apart from Indonesia's and Kuwait's mutual sociopolitical
understanding, the oil sector has been the main propellant in
their economic relations in recent years.
One of the most notable investments that Kuwait launched here
in Indonesia was in 1995 through the megaproject of PT Hemoco
Selayar International oil refinery in 100-kilometer-long Selayar
Island, located in the southern tip of South Sulawesi.
The US$4 billion project, 60 percent-owned by Hemoco Kuwait
General Trading & Contracting Company, with the remaining 40
percent by its Indonesian partner, PT Kilang Minyak Bumi Selayar,
is a massive oil refinery complex consisting of an oil refinery,
petrochemical plant, marine terminal, and an industrial and
residential area.
The island, currently inhabited by some 100,000 people, was
chosen for its strategic location both for the import of crude
oil as well as the export of products to Asia. The deep water
access adjacent to the refinery site guarantees efficiency in
transportation, and the plant lies at the gateway to eastern
Indonesia.
After years of thorough strategic and integrated development
planning and with strong support from related state institutions
of both governments and the provincial authorities, the initial
construction of this strategically vital refinery will be
started, insya Allah (God willing), soon this year, or in 2003 at
the latest.
At present Hemoco has reached the final preparation stages for
the construction of the jumbo oil refinery complex. Giant bidders
from the Netherlands, Germany and the United States are currently
participating in the "beauty contest" to be the main EPC (...)
contractor for the project.
The early development phases of the refinery will help enhance
the economy and quality of life of the locals. The construction
of the plant and all necessary supporting infrastructure, such as
roads, harbors, medical, educational and training facilities,
will maximize the employment of Selayar inhabitants and could
later encourage other industries to develop.
Once the project is completed, the Hemoco refinery will
provide a significant contribution to the Indonesian economy as
it will create 2,500 job opportunities, be the locomotive for the
development of the area and also bring multiplier effects to
Indonesian national development. The project is also expected to
boost Indonesia's foreign exchange earnings by at least $400
million per year from import substitution and exports.
The commitment of the Hemoco joint venture to develop the
multi-billion dollar project was not affected by the economic
turmoil, which has now entered its fifth year. But there are
several things that will bring serious headaches to the company,
namely the implementation of newly-approved oil and gas
deregulation, particularly on retail market policy.
Just like other projects that heavily depend on foreign
investors, Hemoco also hopes for social and political stability
and various incentives such as a tax holiday.
From the beginning, in developing the project concept, Hemoco
designed an environmentally friendly, state-of-the-art facility
that incorporated the latest technology. The project will adopt
best practice in its environmental impact assessment, project
planning and protection of the unique marine ecological
environment in the surrounding areas, particularly the world-
renowned Taka Bonerate waters.
An initial oceanic study indicated the project would not
pollute the famous Taka Bonerate waters, which are located about
120 kilometers from the refinery site.
One of Hemoco's subsidiaries, Selayar International Develop
ment Company, for instance, will help develop tourism in the
southern part of Selayar Island.
In essence, Hemoco does not want to develop Selayar Island to
become purely an exclusive site for its business project, but a
center of excellence for the oil and downstream petrochemical
industry in Indonesia.