Oiltanking to build storage facility in Cilegon

Leony Aurora, The Jakarta Post, Jakarta

The world's second largest petroleum-products storage company Oiltanking will start construction of a 300,000-metric-ton fuel storage facility in Cilegon, Banten, in January next year, a government official says.

Oiltanking Singapore Ltd., a unit of the giant storage operator, will start operating the facility in 2007, the Ministry of Energy and Mineral Resources' director of oil and gas Erie Soedarmo said on Tuesday.

"The groundbreaking will take place in January and the facility will be completed within (between) one and one-and-a- half years," Erie said on the sidelines of a seminar on the prospects for the downstream sector after Pertamina's monopoly ended.

The storage facility, estimated to cost between US$150 million and $200 million, will be the first to be constructed in the country since the government opened up the sector in November, as stipulated by the oil and gas Law No. 22/2001.

Another multi-national company that is also interested in setting up similar facilities of relatively similar size is the Dutch Royal Vopak NV, said Erie.

"Vopak is currently looking for a local partner and a location to build the facility," said Erie.

He further said that storage operators preferred areas near major ports, such as the Tanjung Priok harbor in Jakarta. "Unfortunately the land prices are high and the (available) areas small," he added.

According to the company's website, Oiltanking owns and operates 71 terminals with a total storage capacity exceeding 11.1 million-cubic-meters in 19 countries.

Vopak operates 79 terminals in 29 countries. In Asia, its businesses are spread out in Singapore, Malaysia, Thailand, Korea, China, Japan and Pakistan, with services including tank storage for oil products, gases and chemicals.

According to government data, up to November, 17 companies have requested licenses to build and operate crude and fuel storage facilities. The government has awarded preliminary licenses to ten of them and a business license to one firm.

Aside from storage, the new oil and gas law also liberalizes other parts of the sector, namely refining, transportation, and retailing.