TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Indonesia looks to secure Iranian oil
Various sanctions put in place against Iran by the United States and the European Union have not canceled out Indonesia’s interest in increasing trade ties with the Middle Eastern country, particularly in the energy sector
Change Size
Various sanctions put in place against Iran by the United States and the European Union have not canceled out Indonesia’s interest in increasing trade ties with the Middle Eastern country, particularly in the energy sector.
Indonesia is in dire need of more crude oil supplies amid declining production rates due to aging wells and a lack of new discoveries. Iran seems to hold the answers to some of those woes.
The Energy and Mineral Resources Ministry’s oil and gas director general, IGN Wiratmaja Puja, said although Indonesia had deals with most Middle Eastern countries in the oil and gas sector, Iran was currently extremely appealing because of its competitive prices.
“We hadn’t worked together with Iran because of the sanctions and now we are starting to because it is obvious countries in the Middle East are teeming with oil and gas resources. Right now [Iran] is giving out much better incentives,” he said on Friday.
Data from the Geneva-based International Trade Centre (ITC) shows that in the past decade alone, Indonesia’s petroleum-related imports surged by 30 percent in terms of volume, which shows why Indonesia is trying to get its mitts on Iran’s oil and gas.
Iran has seen great boosts in production since international sanctions against it were lifted last year in exchange for disabling much of its nuclear infrastructure.
A recent report by the International Energy Agency (IEA) reveals that Iran’s production has risen to 3.56 million barrels of oil per day (bopd) since then. The last time Iran achieved such crude oil production was in November 2011.
The new figure indicates that the world’s sixth-largest oil producer — after Saudi Arabia, Russia, the US, China and Canada — is ready to move on from production stagnancy after being crippled by the sanctions for years.
Last December, President Joko “Jokowi” Widodo visited Iran and expressed Indonesia’s interest in increasing cooperation between the two countries in the energy sector, particularly for oil and gas and electricity.
Since Jokowi’s visit, Indonesia has been working hard to realize the partnership and Coordinating Economic Minister Darmin Nasution is set to visit Iran at the end of this month.
During the visit, state-owned oil and gas firm Pertamina is also set to submit a proposal to the National Iranian Oil Company (NIOC) for the Ab-Teymour and Mansouri fields, which have a combined production capacity of almost 100,000 bopd with reserves of over 5 million barrels of oil.
Last year, the NIOC agreed to supply Pertamina with 600,000 metric tons of liquefied petroleum gas (LPG) for 2016 and 2017. An additional 500,000 tons of LPG will be shipped this year, as a follow-up to Jokowi’s visit.
Pertamina’s senior vice president for integrated supply chain (ISC), Daniel S. Purba, said the company was not expecting to sign additional deals for petroleum imports during the next trip.
Pertamina, however, hopes to increase the volume of imports from Iran after conducting several quarterly reviews with the NIOC.
Iran’s current production rate is not yet stable due to many new projects coming onstream. Pertamina expects to procure extra production from the projects.
Indonesia is also planning to offer Iran an investment opportunity in the Bontang refinery construction project in East Kalimantan and other refineries initiated by private firms.
