T

he Muslim world'€™s arch rivals Iran and Saudi Arabia are taking their battle for economic clout into Indonesia as they gear up to secure contracts and cooperation in the energy sector of the world'€™s biggest Sunni-Muslim majority nation.

While Saudi Arabia, the worldwide patron of the Sunni sect, has thus far eyed refinery and crude supply businesses in Indonesia, Iran has expanded its reach aiming not only at refineries but also electricity generation.

Iran'€™s increased engagement with Indonesia follows President Joko '€œJokowi'€ Widodo'€™s instruction to Energy and Mineral Resources Minister Sudirman Said in October to solidify all planned cooperation with Iran forged by previous administrations.

Since then, talks between Indonesia and Iran have intensified. This week, Iranian delegations will arrive in Jakarta to have concrete talks on oil and refinery infrastructure, and next month another meeting is scheduled in Jakarta to talk about the power-generation business.

Around two weeks ago, a government-to-government deal was signed in Bali to be immediately followed up by state firms in both countries.

Oil refining and power generation are the particular coverage of the Bali deal with Iran, the bulwark of the Shia sect, which has recently seen escalating tension with Saudi Arabia after the latter executed a Shia religious leader and the Saudi embassy in Tehran was razed.

'€œThe Bali deal will be followed up by other meetings for each sector. Aside from refineries, Iran is now very interested in electricity projects,'€ Energy and Mineral Resources Ministry secretary-general Teguh Pamudji said recently.

As a follow-up to the deal, Iranian companies are scheduled to meet their counterparts in Jakarta next month to talk about cooperation in the power sector.

The ministry'€™s director general for electricity, Jarman, said that Iran was keen to develop hydropower plants.

'€œThat'€™s because Iran has expertise in such plants. Hydro accounts for around 40 percent of Iran'€™s total power capacity,'€ said Jarman, who served as the head of a team to establish the cooperation with Iran.

State-owned defense manufacturer PT Pindad and power plant constructor PT Indonesia Power will be among the companies scheduled to meet representatives of 10 Iranian firms.

In the oil and gas sector, Iran is also keen to take part in Indonesia'€™s bid to upgrade its refinery infrastructure so that Southeast Asia'€™s biggest economy will be able to process more crude, have greater storage capacity and eventually improve its energy security and independence.

The Energy and Mineral Resources Ministry'€™s director general for oil and gas, IGN Wiratmaja Puja, said the Iranian delegation and Indonesian representatives would hold a meeting in Jakarta this week to follow up on the cooperation.

'€œThe planned cooperation [in the oil and gas sector] includes the development of new refineries,'€ Wiratmaja said recently.

'€œIran can join the bids for refinery development under government-private partnership schemes either in Bontang in Kalimantan or in Arun in Aceh,'€ he said.

Indonesia will need four refineries in the next 10 years. One will be developed under a direct assignment scheme by state oil and gas firm Pertamina and another under a government-private scheme.

In 2008, Pertamina reached a deal with an Iranian firm on a plan to develop a US$6 billion oil refinery plant in Banten. However, because such developments had been overlooked in the past, the partnership fell through.

The international sanctions on Iran that were lifted earlier this year may have also paved the way for more aggressive cooperation by Iran.

The country has sought new markets in which to sell its oil, including Indonesia, which has seen growing imports of crude and petroleum products to meet domestic demand.

Iran'€™s expansion into the country may stymie Saudi Arabia'€™s attempt at tightening its grip in Indonesia.

Saudi oil giant Aramco is currently bidding for the development of a Pertamina refinery worth $6 billion in Tuban, East Java, alongside the company'€™s existing partnership with Pertamina in the upgrading of a refinery in Cilacap, Central Java.

Pertamina and Aramco are also planning to work on the upgrading of Dumai and Balongan refineries.

Minister Sudirman, who was assigned by Jokowi to be '€œliaison officer'€ between Indonesia and the Middle East, said in December that Indonesia would not limit the participation of any country in the development of the energy sector, saying that '€œIndonesia is open to anyone who brings the greatest benefit.'€
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