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Pertamina mulls relocating multibillion-dollar project to Sumatra over land issue
The plan follows the expiration of an agreement between Pertamina and Omani energy firm Overseas Oil and Gas LLC (OOG) to develop a facility in Bontang, where the enterprises face land acquisition problems.
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Two workers are involved in a discussion at the Badak liquefied natural gas (LNG) plant in Bontang, East Kalimantan. (Courtesy of/badaklng.co.id)
I
ndonesia’s top oil company is looking to relocate a US$13.9 billion project over 2,000 kilometers away due to prolonged land acquisition problems at the original site.
State-owned oil company Pertamina is conducting a study into moving its oil refinery and petrochemical plant project from Bontang city in East Kalimantan to Kuala Tanjung in North Sumatra.
The plan follows the expiration of an agreement between Pertamina and Omani energy firm Overseas Oil and Gas LLC (OOG) to develop the facility in Bontang, where the enterprises face land acquisition problems. The one-year deal between the two enterprises ended December last year.
Read also: Low oil prices push Pertamina's 2019 profit down 16% to $2.1b
“[Pertamina put Kuala Tanjung on the table because] it is closer to the market and the land is available,” Pertamina investment and risk management director Heru Setiawan told reporters in Jakarta on Monday. “That is near the international market and also the Sumatran market.”
North Sumatra is home to the under-construction Kuala Tanjung Port located along the busy Malacca Strait. The shipping hub, the final phase of which is expected to be completed by 2023, is slated to become Indonesia’s second-largest port after Tanjung Priok Port in Jakarta. The province is also home to the Sei Mangkei special economic zone.
Developing oil refineries is part of Indonesia’s efforts to further slash oil and gas imports, which are a major contributor to the country’s trade deficit. Such imports reached $0.81 billion in January, down 34.7 percent from the same month last year, Statistics Indonesia (BPS) data shows.
