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Iran to supply RI with oil, build $3b refineries

Business fellows: Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) president Gholam Hossein Shafei (center) chats with Indonesia-Iran Bilateral Committee chairman Fadel Muhammad (second left), Investment Coordinating Board (BKPM) head Mahendra Siregar (second right), Indonesian Chamber of Commerce and Industry (Kadin) chairman Suryo Bambang Sulisto (right) and Iranian Ambassador to Indonesia Mahmoud Farazandeh during the Indonesia-Iran Business Forum in Jakarta on Tuesday

The Jakarta Post
Jakarta
Wed, February 12, 2014

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Iran to supply RI with oil, build $3b refineries Business fellows: Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) president Gholam Hossein Shafei (center) chats with Indonesia-Iran Bilateral Committee chairman Fadel Muhammad (second left), Investment Coordinating Board (BKPM) head Mahendra Siregar (second right), Indonesian Chamber of Commerce and Industry (Kadin) chairman Suryo Bambang Sulisto (right) and Iranian Ambassador to Indonesia Mahmoud Farazandeh during the Indonesia-Iran Business Forum in Jakarta on Tuesday. (JP/Nurhayati) (ICCIMA) president Gholam Hossein Shafei (center) chats with Indonesia-Iran Bilateral Committee chairman Fadel Muhammad (second left), Investment Coordinating Board (BKPM) head Mahendra Siregar (second right), Indonesian Chamber of Commerce and Industry (Kadin) chairman Suryo Bambang Sulisto (right) and Iranian Ambassador to Indonesia Mahmoud Farazandeh during the Indonesia-Iran Business Forum in Jakarta on Tuesday. (JP/Nurhayati)

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span class="inline inline-none">Business fellows: Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) president Gholam Hossein Shafei (center) chats with Indonesia-Iran Bilateral Committee chairman Fadel Muhammad (second left), Investment Coordinating Board (BKPM) head Mahendra Siregar (second right), Indonesian Chamber of Commerce and Industry (Kadin) chairman Suryo Bambang Sulisto (right) and Iranian Ambassador to Indonesia Mahmoud Farazandeh during the Indonesia-Iran Business Forum in Jakarta on Tuesday. (JP/Nurhayati)

With Indonesia confronted with depleting crude oil production at home, oil-rich Iran pledged on Tuesday to flush the country with crude and help construct refineries worth US$3 billion.

The deal is part of Iran'€™s attempts to seize business opportunities worldwide after the United Nations eased economic sanctions on the country in November, a move linked to Iran'€™s controversial nuclear program.

During the opening of the Indonesia-Iran Business Forum on Tuesday, an investment deal worth $3 billion for the construction of oil refineries in West Java and Banten by PT Kreasindo Resources Indonesia and Iranian Nakhle Barani Pardis (NBP) Co. was signed.

Kreasindo is a mining and energy company founded in 2009 as a holding for several subsidiaries owned by the Mining and Energy Foundation. The company'€™s clients include state oil and gas company PT Pertamina.

Kreasindo president director Rudy Radjab said the companies were still undergoing a feasibility study, but construction would begin in 2015 with completion scheduled for 2018.

'€œThe deal will require Iran to supply us with its crude oil before it sells to other countries,'€ said Rudy, who is also the deputy chairman of the Indonesian Chamber of Commerce and Industry'€™s (Kadin) Iran committee.

According to Rudy, NBP has pledged to supply between 20,000 to 300,000 barrels per day (bpd) of crude to be processed in the refineries for a period of 20 years.

The joint venture will see Kreasindo financing 70 percent of the project while NBP 30 percent.

The deal was made amid Indonesia'€™s efforts to seek reliable and cheaper oil imports.

Indonesia has seen its consumption of crude and refined oil grow exponentially to more than 1 million bpd, while crude supply at home has declined by more than 10 percent in the past decade to around 840,000 bpd.

Since the UN sanctions in 2006, Indonesia'€™s oil trade with Iran, the third-largest holder of global oil reserves, has been limited.

Indonesian Ambassador to Iran Dian Wirengjurit said as the sanctions were lifted, trade with Iran would no longer be made through third parties.

Indonesia Investment Coordinating Board (BKPM) chief Mahendra Siregar, who witnessed the signing of the deal, said the cooperation was expected to pave ways for bilateral trade expansion not only in the energy sector but also in palm oil, paper, food and automotive components.

During the forum, BKPM and the Iran National Committee of International Chamber of Commerce (ICC) also signed a memorandum of understanding (MoU) on the formation of an Indonesia-Iran investment promotion committee.

Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) president Gholam Hossein Shafei was upbeat that the business forum would improve trade and investment relations between Indonesia and Iran.

He said in the past there had been a number of MoUs between the two countries but that they had not been fully implemented.

Indonesia is the first stop on the ICCIMA'€™s tour, which has brought along more than 50 Iranian businessmen.

'€œThis has shown how much Iran values Indonesia as a trading partner,'€ said Shafei.

Iran'€™s economic potential has been severely undermined by sanctions from the UN along with the US and the UK that placed restrictions in 2012 on Iran'€™s oil trade and international financial transactions.

The sanctions stemmed from world powers'€™ suspicions that Iran'€™s nuclear program was aimed at building a nuclear bomb. (dwa)

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