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Fri 11 Feb 2011 01:55 PM

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Shell, Aramco may build Indonesia plant, says Hidayat

Shell may team up with Saudi Arabian Oil Co and Pertamina to build the refinery in Tuban, East Java

Shell, Aramco may build Indonesia plant, says Hidayat
Indonesia wants to boost investments in refineries to reduce the nation’s dependence on imports of oil products

Royal Dutch
Shell, Europe’s largest oil producer, may build a refinery in Indonesia even as
National Iranian Oil Co scrapped a similar plan, Industry Minister Mohamad
Hidayat said.

Shell may
team up with Saudi Arabian Oil Co and PT Pertamina to build the refinery in
Tuban in the province of East Java, Hidayat told reporters in Jakarta today
after meeting executives from a unit of Shell. Darwin Silalahi, head of Shell’s
Indonesian unit, and Budiman Moerdijat, a spokesman, didn’t respond to two
phone calls and mobile text messages. A Dharan-based spokesman for Saudi Aramco
declined to comment when contacted by telephone.

“The
government is preparing a fiscal policy to help attract investors, including
for the Aramco project,” Hidayat said. Pertamina will act as an agent to market
fuels from the Tuban refinery, he said.

Indonesia
wants to boost investments in refineries to reduce the nation’s dependence on
imports of oil products. Consumption of subsidized fuel may rise 6 percent this
year to 42.5 million kiloliters because of an increase in vehicle sales,
Djaelani Sutomo, marketing director at Pertamina, said in June.

Indonesia,
Southeast Asia’s biggest crude oil producer, imports diesel, gasoline and jet
fuel because its refining capacity lags behind consumption.

Pertamina,
Indonesia’s state oil company, will agree this year with Saudi Aramco on the
development of a $5bn refinery project, Karen Agustiawan, president director of
Pertamina, said on Dec 6. The plant will have a capacity of as much as 300,000
barrels a day, she said.

Pertamina
will also sign a $5bn accord with Kuwait Petroleum Corp to expand the Balongan
refinery in West Java by as much as 300,000 barrels a day, Agustiawan said. The
plant has a capacity of 125,000 barrels a day, according to data compiled by
Bloomberg.

“Kuwait
Petroleum has performed a feasibility study and in August they will start
construction,” Hidayat said today.

Iranian Oil
may cancel a plan to build a refinery because of a disagreement on the price of
the crude oil supply, he added. Pertamina and Iranian Oil had planned to build
a refinery in western Java with a daily capacity of 150,000 barrels of oil in
2014, Priyo Utomo, then senior vice president at Pertamina, said in July 2009.

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