Land Acquisition for Pertamina-Rosneft Oil Refinery Nearly Complete After Stalling

The Investment Coordinating Board (BKPM) has recorded that land acquisition for the oil refinery and petrochemical complex development project in Tuban, East Java, has reached 92 percent of the total 841 hectares. The investment project in Tuban is included in the list of Rp708 trillion in stalled investments recorded by the BKPM. Since the partnership between Pertamina and Rosneft was formed in 2017, the development project has been long delayed, partly due to land acquisition obstacles. The value of this stalled project is substantial, amounting to Rp211.9 trillion. The Tuban Oil Refinery project is owned by PT Pertamina Rosneft Pengolahan dan Petrokimia, a joint venture between Pertamina (55 percent) and Rosneft PJSC of Russia (45 percent). This project is part of the New Grass Root Refinery (NGRR) built by Pertamina to meet domestic energy needs and produce high-quality petrochemicals. The refinery construction has been included in the priority infrastructure projects since President Jokowi’s first cabinet, both in the form of new refineries (NGRR) and the development of existing refineries (Refinery Development Master Project/RDMP). However, various obstacles have arisen, such as land acquisition, licensing, and contract finalisation. BKPM’s Director of Sectoral Promotion, Imam Soejoedi, stated that the BKPM has been taking intensive steps to resolve land acquisition issues in Tuban Regency since last year, as well as addressing the permits that have held the project back. There are still a few remaining tasks related to certain permits, namely environmental permits. The process is currently being accelerated in cooperation with the Ministry of Environment and Forestry (KLHK). ‘The Head of BKPM has directly intervened by collaborating with the East Java Provincial Government, the Tuban Regency Government, and Pertamina. Completing this project is a government priority to build downstream industry domestically so that Indonesia can reduce its import deficit, dependence on oil imports, and build national industrial resilience,’ Imam said in Jakarta on Thursday (28/5). The Head of BKPM formed a special team within the BKPM to accelerate the resolution of issues in Tuban. In early February 2020, the Head of BKPM visited the project site to finalise negotiations with the local community. This was done because the project will have a direct positive impact, including the absorption of up to 20,000 workers during construction and 2,500 workers during the operational phase. ‘He formed a special team to shepherd this investment to completion, and did not hesitate to get directly involved. Besides the enormous investment value of Rp211.9 trillion, the success of this project will provide tremendous benefits for the nation. Therefore, it must be safeguarded. The target is for it to be operational by 2026,’ Imam said. Meanwhile, Pertamina’s Director of Megaprojects for Processing and Petrochemicals (MP2), Ignatius Tallulembang, stated that the Tuban GRR is one of the priority projects to be completed. Pertamina and Rosneft have even signed the Tuban Refinery design contract with the selected contractor in October 2019. The Basic Engineering Design (BED) and Front End Engineering Design (FEED) are currently underway. ‘With the support of all parties, it is hoped that the refinery construction will run smoothly and be completed on time, so that we can achieve energy sovereignty,’ Ignatius explained.