Private firms to build large refineries
JAKARTA (JP): Two private companies are set to develop large oil refineries in Probolinggo and Situbondo, East Java, state- owned oil and gas company Pertamina's president Faisal Abda'oe said yesterday.
Abda'oe said one of the companies was PT Buana Ganda Perkasa, owned by Probosutedjo, which planned to develop a refinery plant in Probolinggo with US$3.5 billion investment.
The other company is PT Asia Pacific Petroleum of Hong Kong which plans to build a refinery plant in Situbondo with $1.54 billion investment.
According to Pertamina, Buana Ganda Perkasa received approval from the Investment Coordinating Board in July 1994, while Asia Pacific Petroleum was approved in July 1995.
"The two companies have reported to Pertamina their plan to develop the projects," Abda'oe said during a ceremony to sign a gas supply agreement with private electricity firm East Java Power.
The government recently issued Presidential Decree No. 31 of 1997 to allow private companies to set up oil and gas refineries themselves or in a joint venture with Pertamina.
Pertamina will remain the sole distributor of private fuel in the domestic market, but private refineries can export fuel which is not needed by Pertamina, according to the new regulation.
Although the decree states that Pertamina will buy the fuel at international market prices, a Pertamina director Samto Utomo recently said the price could be negotiated to a level to encourage investment.
Abda'oe said yesterday Pertamina had not yet started negotiations with the two companies over the price but promised to do so after the government issued the subsequent rulings explaining Presidential Decree No. 31/1997.
Pertamina data says the company now operates eight refineries with a combined capacity of 989,500 barrels a day.
Domestic fuel consumption grew 6 percent to 50.19 million kiloliters in 1996/1997, 22.5 percent or 11.34 million kiloliters of which were imported.
Abda'oe earlier said Indonesia needed additional refineries with a combined capacity of 350,000 barrels per day by the year 2000. (jsk)