Limited crude oil supply affects refinery projects
Limited crude oil supply affects refinery projects
JAKARTA (JP): A limited supply of crude oil and the lack of financing resources have slowed down the construction of oil refinery projects in the private sector, an executive of the state-owned oil company Pertamina says.
"Of the investors for seven refinery projects approved by the Investment Coordinating Board (BKPM) last year, none has been ready to start construction," Pertamina's director for processing, G.J. Atihuta, told reporters here yesterday.
The sponsors of the seven refinery projects are PT Tanjung Uban Refinery in Tanjung Uban of Riau, PT Sumber Catur Daya Nusantara Corp. in Pare-Pare of South Sulawesi, PT Asia Pacific Petroleum in Situbondo of East Java, PT Sabang Oil Refinery in Aceh, PT Buana Ganda Perkasa and Wisertech Ltd. in Probolinggo of East Java, PT First Indra Corp. in Sorong of Irian Jaya and PT Norco Internusa and Foster Wheeler in Gresik of East Java.
All of the investors have actually finalized their feasibility studies, but most of them are worried about the consistent supply of crude oil, Atihuta said.
"It is totally up to them to get supplies of crude oil either from private domestic or overseas suppliers, instead of relying on Pertamina," he said.
He noted that at least 33 investors have applied to Pertamina for the establishment of oil refineries, which are now offered to the private sector.
Pertamina currently monopolizes the operation of oil refineries in the country.
Financing
In addition to the difficult supply of crude oil, Atihuta said that private investors are also confronted with the lack of financing resources for their projects.
"It is understandable because one refinery project with a processing output of 100,000 barrels per day (bpd) may cost at least $1 billion," he argued.
Buana Ganda Perkasa, for example, has a commitment of investing $3.50 billion for its project, Asia Pacific Petroleum $1.09 billion and Sabang Oil Refinery $1.58 billion, he said.
Antara news agency quoted Atihuta as saying in Samarinda on Wednesday that Pertamina is now upgrading its refinery in Balikpapan to increase its processing capacity from 250,000 bpd at present to 267,000 bpd.
"Pertamina has appointed PT Citra Sena Wibawa to upgrade the plant at a total cost some $170 million," he said. (fhp)