Federal Government plans to invest US$2.68 billion in Indonesia refinery

The Federal Government plans to invest RP24 trillion (about US$2.68 billion) in Indonesia to fund the construction of three oil refineries, an Indonesian official has said.

According to The Jakarta Post, Indonesian Industry Ministry’s Director-General for manufacturing-based industry, Panggah Susanto, was quoted by kompas.com as saying that both countries had agreed to build the refineries in Indonesia.

The report quoted Panggah as saying that Nigeria, which produces 2.6 million barrels of oil per day (bpd), was looking for a partner to refine its crude oil.

Panggah, according to the report, said: “Previously they wanted the refineries to be built in Nigeria. However, as Indonesia is currently improving its downstream industry, Indonesia wanted the refineries to be built here instead.”

The refineries, which are projected to produce 300 barrels per day (bpd) each, the report said, would be used to process crude oil from Nigeria.

“Indonesian state oil firm – PT Pertamina, will buy the crude oil from Nigeria and process it here,” he added.

When The Nation contacted on phone, the Group General Manager, Group Public Affairs, Nigerian National Petroleum Corporation (NNPC), Dr. Levi Ajuonuma, to comment on the issue, he said he was not aware of any such deal between Nigeria and Indonesia. The NNPC is Nigeria’s state run oil company that is supposed to midwife such transaction but it claimed ignorance of the deal.

Nigeria despite being a big player in the global oil market with crude reserves of about 35 billion barrels and 187 trillion cubic feet of gas reserves depends on imported refined petroleum products for its domestic consumption and will spend over N1.3 trillion this year to subsidise the cost of imported premium motor spirit (petrol), sold at regulated price of N65 per litre.

The country’s three refineries with combined installed refining capacity of 445,000 barrels of crude daily, work at very sub-optimal level and sometimes, don’t entirely work, especially when pipelines that convey crude to the plants are impacted. The situation compels the government to depend on importation to meet energy needs of the populace.

The government is discussing with some international oil companies to collaborate with the NNPC and some state governments to build new refineries but close to two years, the initiative commenced, the feasibility study is still being conducted.

THE NATION