Indonesia seeks investors for Bontang Oil Refinery

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Indonesia seeks investors for Bontang Oil Refinery

The government of Indonesia intends to construct the Bontang oil refinery in East Kalimantan through a private-public partnership (PPP).

According to Sudirman Said, Minister of Energy and Mineral Resources, the oil refinery is scheduled to commence in 2017 and state-owned energy company Pertamina will be in charge of the project and is now searching for investors to participate in the project.

The estimated investment of the project is $14.5 billion.

Indonesia's Finance Ministry will hire a team of international consultants to assist Pertamina finding the right partner. However, given the low global oil prices it may be tough to find a partner.

The Indonesian government also announced it offers incentives to lure investors: 

  • Free use of existing infrastructure at the refinery site.
  • The government also assures that there will be no trouble related to the land certification process.  
  • Tax holiday to the investor (that can be extended up to 15 years).

This Bontang oil refinery will have a production capacity of more than 235,000 barrels of petroleum per day. 

Due to increasing fuel demand in Indonesia, output of the Bontang refinery will be consumed domestically. 

Sources reported some time ago that Japanese petroleum firm JX Nipon Oil and a Saudi Arabian-based investor named Syekh Said Al Husaini were interested in this project.

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