Indonesia plans for deal with Saudi Aramco

Pertamina is in talks with CNOOC, Saudi Aramco, Thailand’s PTT and a Japanese oil company to form joint ventures that will guarantee crude supplies to Indonesia’s refineries and help fund major upgrades.

The news comes amid plans by the Indonesian government to modernise the country’s refineries and build new ones as part of its reforms to meet spiralling energy demands.

In October Indonesia shelved plans for building two new refineries with Saudi Aramco and Kuwait Petroleum due to disagreements over tax issues.

“We are looking for partners to develop refineries and that can guarantee security of supply,” Ahmad Bambang, Pertamina’s new director of refining, trading and marketing, told reporters at a company event on Wednesday.

“We will select whoever will bring the maximum benefit to Pertamina and the state.”

“Previously, there were problems with tax holidays, tax incentives and uncertainty over permits,” Bambang said.

“We are assuring them we can go (forward). Now we are offering partnership, including in marketing, not just in developing the refineries.”

Indonesia’s state energy firm needs up to $25bn in investment to double the crude intake of at least four of its existing refineries, to raise its total capacity to 1.6mn bpd by 2025, Bambang said.

Pertamina is also considering building two or three new refineries, each with a capacity of around 300,000 bpd.

Indonesia, which is expected to be the world’s largest gasoline importer by 2018, is rushing to build the necessary infrastructure to meet this demand, but has not built a new refinery since 1994.

It is Southeast Asia’s fastest growing economy hoping to increase storage and refining capacity which will allow it to enter stable long-term supply contracts with foreign producers.