Tuban to get new refinery to save fuel shortages
Tuban to get new refinery to save fuel shortages
The Jakarta Post, Jakarta
To prevent future fuel shortages, the government will build the
country's 10th refinery in Tuban, a northern coast town of East
Java province.
"The government has decided to build a refinery in Tuban if
oil exploration and exploitation can be done in Cepu, Central
Java, and in Jeruk field, south of Madura island," President
Susilo Bambang Yudhoyono announced at the presidential office on
Monday.
By developing the refinery, he explained, state oil and gas
firm PT Pertamina would also have more fuel depots and in the end
it would improve domestic fuel distribution.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said the refinery would have a capacity of between 150,000 and
200,000 barrels of oil per day (bpd).
Such a capacity is deemed sufficient to process output from
Cepu, which is expected to reach 170,000 bpd at its peak, and
from Jeruk, estimated to produce at least 50,000 bpd of crude
oil.
At present, Indonesia has nine big and small refineries with a
total processing capacity close to one million bpd. With domestic
fuel consumption rising by some 7 percent per year, the
government through Pertamina currently has to import
approximately 300,000 barrels of crude oil and 400,000 barrels of
fuel products each day to secure supply.
Analysts have long urged the government to build more oil
refineries. However, the cash-strapped government has said that
it is having difficulty funding capital-intensive endeavors as
big as a refinery.
House of Representatives Commission VII for energy and mining
recently decided to encourage refinery development and allocate
funds for such projects in state budgets in following years.
The President said that some 17 preliminary licenses had been
issued for private parties to construct refineries. They are yet
to materialize as the subsidy system in the country translates
into a small fee for refiners and subsequently low income.
The Downstream Oil and Gas Regulatory Agency (BPH Migas) has
requested lower import duties on imported capital goods, such as
machinery and materials, to build expensive facilities such as
refineries and fuel depots across the archipelago.
The Ministry of Finance is investigating the possibility.