T

he government will give private companies broader opportunities to enter the downstream sector of the oil and gas industry, which thus far has been dominated by state oil and gas company PT Pertamina, a minister has said.

Energy and Mineral Resources Minister Sudirman Said confirmed the government would set a mechanism to ensure fairness.

'€œFairness means if certain investors operate in areas of high demand, they also have to work in areas with a lack of demand. It will be good for our nation because there will more people able to bear the burden of infrastructure development and building up fuel stocks,'€ he said.

His statement came following the request for more opportunities in the downstream sector by businesses planning to invest in the country'€™s upstream and midstream oil and gas sectors.

The requests had been made by, among others, oil and gas giant Saudi Aramco, which has previously expressed its interest in investing in refinery development in Indonesia.

The request was proposed again during a recent visit by President Joko '€œJokowi'€ Widodo and his ministers to Saudi Arabia.

During the meeting, Sudirman said, Saudi Aramco called for support from the Indonesian government to realize the company'€™s planned investment, to open opportunities for the company to enter the downstream sector, either on its own or through a partnership with Pertamina and to provide incentives such as tax holidays for its planned refinery project.

According to Sudirman, Saudi Aramco planned to build filling stations and develop the storage business. Saudi Aramco is currently in discussion with Pertamina on partnership projects to upgrade the latter'€™s existing refineries in Indonesia.

Under Pertamina'€™s plan, called the Refinery Development Roadmap, Saudi Aramco will assist the state company in upgrading the Dumai refinery in Riau, the Cilacap refinery in Central Java and the Balongan refinery in West Java.

Details of the partnership are still under negotiation.

Pertamina president director Dwi Soetjipto said his company would need to further evaluate the plan '€œWe will evaluate it. The most important thing is that the project can be realized. We will see whether there is agreement between investors'€™ interests and those of Pertamina,'€ Dwi said.

Apart from being the biggest national oil and gas upstream player in the country, Pertamina currently dominates the downstream sector.

It operates almost all the filling stations in the country and is responsible for the distribution of subsidized fuel nationwide.

A number of international players, such as Shell and Total, have a relatively small number of filling stations selling non-subsidized fuel.

In the midstream business, Pertamina is the operator of six refineries in the country, namely Dumai, Cilacap, Balongan, Plaju, Balikpapan and Kasim.

Those refineries have a combined capacity to process over 1 million barrels of crude per day. However, due to their age, the refineries are no longer able to operate at full capacity. Consequently, the country has to import a large proportion of its petroleum products to meet the growing demand for energy in the domestic market.

The government has called on investors to invest in refinery development in the country. However, previous investment plans have been hindered by a variety of issues, including incentives to ensure the economic viability of the projects.