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resident Joko '€œJokowi'€ Widodo says that the government'€™s efforts to boost the downstream oil industry through refinery development will yield a significant reduction in oil imports, which have burdened the country'€™s trade balance and current account.

During a visit to PT Trans Pacific Petrochemical Indotama'€™s (TPPI) refinery in Tuban, East Java, Jokowi expressed his optimism that the company, which is owned by state oil-and-gas firm Pertamina, and Pertamina'€™s residual fluid catalytic cracking (RFCC) unit in Cilacap, Central Java, might reduce Premium gasoline imports by around 36 percent by December.

As of today, TPPI'€™s Tuban refinery and Pertamina'€™s RFCC unit in Cilacap are hoped to have already cut Premium imports by 29 percent. The refinery is currently running at 70 percent of its capacity and it will reach 100 percent by year'€™s end.

As for diesel fuel, Jokowi said the reduction had reached 40 percent. '€œThere will no more be imports by the end of the year,'€ the President said on Wednesday as quoted from a press release distributed by the presidential communications team.

Jokowi'€™s administration is pushing efforts to boost refinery development in the hope of reducing dependence on oil imports that have pressured the country'€™s current account deficit, a major worry among investors.

Last month, Pertamina upped its stake in TPPI to 48.59 percent in a US$76 million deal with Argo Capital BV to boost the company'€™s capacity to refine. The company'€™s Cilacap cracking unit has also started commercial operations to help boost liquefied petroleum gas (LPG) production, which will eventually lower the domestic need for imports.

These downstreaming efforts, according to the Central Statistics Agency (BPS), cut oil imports by 14.55 percent to US$1.1 billion in September from $1.29 billion in August, helping the country to record its biggest trade surplus in three years, a surplus reaching $7.13 billion in the first nine months of this year.

Pertamina says that TPPI'€™s refinery is now able to produce around 61,000 barrels of Premium per day, 10,000 barrels of high octane mogas component (HOMC) per day, 11,500 barrels of diesel fuel per day and 480 metric tons of LPG per day.

Pertamina president director Dwi Soetjipto said the fuel and LPG import cuts that resulted from the TPPI operation might save around $2.2 billion in foreign exchange a year.

Dwi said that having the TPPI start its operations could also bring about positive changes to the country'€™s economy, particularly in terms of investment and employment.

'€œAround 700 people can now go back to their work at TPPI and the operation might spark around 2,000 additional jobs in the surrounding areas,'€ Dwi added.

Energy and Mineral Resources Minister Sudirman Said deemed the continuation of TPPI'€™s refinery by Pertamina as a milestone and '€œan important phase in introducing comprehensive oil and gas management'€.

Only three years after its establishment, the TPPI was hit by the 1998 financial crisis that paralyzed the region, leaving it with unsettled debts, complicated condensate sales and a purchase agreement for feedstock.

Recently, the company has been dragged into the public spotlight following allegations of graft implicating several high-level officials. The alleged graft revolved around the appointment of TPPI as the buyer and seller of the state'€™s condensate in 2009. The graft potentially caused state losses of Rp 2 trillion.
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