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Jakarta Post
The Jakarta Post
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RI to buy LPG from Iran, team up on energy

  • Ina Parlina

    The Jakarta Post

Tehran | Thu, December 15, 2016 | 07:09 am
RI to buy LPG from Iran, team up on energy Welcome to Iran: Iran’s President Hassan Rouhani (right) greets President Joko “Jokowi” Widodo at Sa’dabad Palace in Tehran on Wednesday. (AP/File)

Indonesia is seeking to forge closer economic ties with Iran as it plans to import liquefied petroleum gas (LPG) and cooperate in the energy sector.

President Joko “Jokowi” Widodo met with Iranian President Hassan Rouhani and a number of business delegates during his two-day state visit to the Persian Gulf country.

Both leaders expressed their commitment to taking bilateral relations to new heights by expanding economic cooperation, particularly in the energy sector.

Indonesia agreed to purchase more than 500,000 metric tons of LPG from Iran in 2017. “The purchase agreement ensures that price efficiency can be achieved,” Jokowi said.

Iran also expressed its commitment to investing in Indonesia by building an oil refinery in East Java and a 5,000-megawatt mobile power plant in an unspecified location.

Both countries also explored the possibility of teaming up to operate two oil fields in Ab-Teymoura and Mansouri.

Rouhani, who declared that Indonesia was a strategic energy partner, said, “Iran is ready to meet Indonesian needs for oil, gas and LPG, as well as other products of the industry” and later invited Jakarta to participate in Iran’s oil and gas industry.

Indonesian Energy and Mineral Resources Minister Ignasius Jonan, who accompanied Jokowi on his state visit, said the two blocks were “lucrative” and that state-owned oil and gas firm Pertamina would submit a preliminary proposal on how to develop the two onshore fields in February next year.

Jonan said there was also a possibility for a share split with Lukoil — Russia’s second-biggest oil producer — in the two oil fields.

The cooperation between the two countries is being seen as a part of Iran’s attempt to breathe a new life into its energy industry, which has been paralyzed by international sanctions.

The sanctions were lifted in January after the United Nations nuclear watchdog, the International Atomic Energy Agency, stated that Iran had met all the requirements agreed upon by six world powers.

Iran has the world’s biggest natural gas reserves, which stand at 1,201.4 trillion cubic feet (34 trillion cubic meters), according to an estimate by BP Plc., as quoted by Bloomberg.

Earlier in August, Pertamina and its Iranian counterpart, National Iran Oil Company (NIOC), signed a memorandum of understanding (MoU) to carry out a preliminary study on both fields.

The NIOC previously agreed to supply Pertamina with a total volume of 600,000 metric tons of LPG for 2016 and 2017.

The first shipment of LPG, which arrived in Indonesia on Oct. 13, marked the first time Iran had supplied gas to the country.

Jokowi and Rouhani had also agreed to “immediately carry out efforts to increase two-way trade” amid decreasing bilateral trade activities between the two countries, said Foreign Minister Retno LP Marsudi.

Bilateral trade between Indonesia and Iran amounted to US$273.1 million last year, down 39.1 percent from 2014, according to data from the Trade Ministry.

From January to September this year, trade slid by 16.1 percent annually to $178.1 million. Indonesia’s exports declined by 16.3 percent to $144.2 million, while imports shrank by 15.2 percent to $33.9 million.

Around 60 businesspeople joined Jokowi on his visit to Iran, and they are set to meet with their counterparts on Thursday.

Indonesia and Iran also signed four MoUs on the electricity industry and renewable energy; mutual legal assistance; extradition cooperation; and incentives for investment.

Jokowi’s trip to Iran was a reciprocal visit after Rouhani came to Jakarta in April last year for the 60th commemoration of the Asian-African Conference and joined a short bilateral meeting with Jokowi on the sidelines of the event.

It was Jokowi’s first visit to Iran since taking office in 2014 and the first Indonesian presidential visit to Iran in eight years.

The last Indonesian leader to visit Tehran was Jokowi’s predecessor Susilo Bambang Yudhoyono who visited former Iranian president Mahmoud Ahmadinejad in 2008.

Jokowi spent his second day in Tehran in a series of meetings with Iranian officials, including separate sit-downs with Iranian Parliament Speaker Ali Larijani and Supreme Leader Ayatollah Sayyid Ali Hosseini Khamenei.