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.