T

he Iranian government is looking for opportunities to develop refineries in Indonesia, where demand for oil is growing faster than the ability to secure hydrocarbons.

On Thursday, the representatives of Iran's energy ministry paid a visit to newly appointed Energy and Mineral Resources Minister Sudirman Said to discuss the issue.

Acting director general for oil and gas at the ministry Naryanto Wagimin, who accompanied the minister during the meeting, said the Middle-Eastern country was seeking to invest in Indonesia, particularly in refineries, petrochemicals and liquefied natural gas (LNG).

'It's still at the initial stage. We will need a further meeting to discuss the realization of their plan. We welcome them and hope that it won't only be a meeting about rhetoric. We will have a working group meeting to follow this up,' he said.

Naryanto added that Iran's oil characteristics suited the country's oil refinery in Cilacap, Central Java. 'Thus, it plans to build a refinery that will be supplied by its crude oil,' he said.

Indonesia has six refineries nationwide that are operated by state-owned PT Pertamina. The refineries are old and are running below full capacity. The country has not built any new refineries since 1994, when former president Soeharto inaugurated a refinery in Balongan, West Java.

Poor refinery facilities have increased the country's dependency on the import of oil products, which have hurt its economy. Moreover, declining national oil production has also become a national concern.

Indonesia, a former member of OPEC, has seen fuel consumption reach around 1.6 million barrels of oil per day (bopd), while national output is below 800,000 bopd.

Prior to their visit on Thursday, Iranian firm Nakhle Barani Pardis (NBP) Co. sealed an agreement with PT Kreasindo Resources Indonesia for a planned US$3 billion investment of the construction of oil refineries in West Java and Banten.

In the deal, NBP also agreed to supply up to 300,000 bopd of crude to be processed in the refineries for a 20-year period.

African oil rich country Angola has also approached the government about its plan to supply oil to Indonesia. It is exploring possibilities to develop refineries here. Angolan firm Sonangol EP has also inked an agreement with state-owned PT Pertamina to cooperate in the development plans.

Pertamina is also increasing its capacity to meet the growing demand of oil and its products. The company is planning to build fuel storages in East Java, Kalimantan, East Nusa Tenggara and Sorong in Papua.

'We will invite the private sector to invest and cooperate with us. We're planning to have a combined new capacity of 1.5 million kiloliters within five years, which we will either develop by ourselves or with partners,' Pertamina marketing and trading director Hanung Budya said.

He added that his company currently had storage facilities of 5 million kiloliters, in which only 4 million kiloliters could be used. 'The demand for fuel is 185,000 kiloliters per day. The 4 million kiloliters capacity is only enough for 21 days,' Hanung said.