Joint venture continues with $3b refinery project

Joint venture continues with $3b refinery project

JAKARTA (JP): Representatives of PT Kilang Minyak Nusantara
(KMN), a joint venture between Arabian, Chinese and Indonesian
investors, said the company would go ahead with its plan to build
a US$3 billion refinery in South Sulawesi despite the country's
political instability.

Ibrahim Al-Ogab, president of Saudi Arabia-based International
Business Company (IBC), which is a partner in the joint venture,
said the consortium was determined to continue with the project
on the hope that Indonesia would manage to overcome the current
economic and political crisis in the near future.

"With the project, we intend to help Indonesia re-build market
confidence in the business opportunities that exist in this
country.

"But, the project is not merely driven by the wish to help the
country but also based on the optimism that Indonesia will
recover from the crisis as other countries in the region have
done and will become a strong country in two years," Ibrahim
said.

IBC together with Al-Banader International Group, also from
Saudi Arabia, holds a 40 percent stake in KMN and is in
partnership with a consortium comprised of Chinese companies
China National Electrical Equipment Corporation (CNEEC),
Investment Pacific Inc., and Law Swee Seng, which hold a 40
percent stake.

The remaining 20 percent is held by a joint venture of
Intanjaya Agromegah Abadi and American firm Inter Global
Technologies.

KMN has planned to build a giant refinery with a processing
capacity of 300,000 barrels of oil per day in Bacukiki, Pare-
Pare, South Sulawesi.

"The construction of the refinery will start in one year or
maybe less than one year," Ibrahim said.

He said IBC and Al-Banader would guarantee the supply of crude
oil to the refinery, while the Chinese partners will become the
off-takers of the refinery's products.

He said American investment fund Alfax International Fund was
ready to finance the project.

Intanjaya's president Mappasulle HS said KMN was now in the
process of acquiring 1,000 hectares of land for the project.

According to Mappasulle, KMN has gained the support of
President Abdurrahman Wahid and obtained permits from the local
authorities.

It was seeking to obtain a "recommendation" from Minister of
Energy and Mineral Resources, which is a prerequisite for the
company to obtain the final license from the Investment
Coordinating Board (BKPM).

He said the company did not need to seek approval from state
oil and gas company Pertamina "because the planned refinery will
not take crude oil from the domestic market and will sell most of
its products to the overseas market."

Mappasulle further added that aside from the Pare-Pare
refinery project, KMN also planned to build another refinery of
the same capacity on Rempang Island in Riau.

He said the company would begin the construction of the
Rempang refinery six months after the construction of the Pare-
Pare project started.

Another investor, PT Hemoco Selayar International Oil
Refinery, which is 60 percent owned by Kuwaiti firm Hemoco Kuwait
General Trading and Contracting Co, announced two years ago plans
to build a $2.4 billion refinery on Selayar Island, also in South
Sulawesi.

But, the future of the project remains unclear. (jsk)