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Jakarta Post

Our overliberal policy fails oil refinery investors

  • T.H. Surya

    Jakarta

Jakarta   /   Fri, October 16 2020   /  01:00 am
Pertamina refinery overview (2018)(Source:/Pertamina)

Indonesia faces an enormous challenge in meeting domestic demand for petroleum in the coming years, but for some reason, the 2001 Oil and Gas Law intended to liberate the downstream petroleum sector has not led to new private refineries. The law has attracted investors, but all have gone into the marketing and distribution sector and avoided making long-term commitments to build refineries. This overliberal policy for the downstream petroleum industry has been an utter failure. All evidence suggests that there is a case for making it less liberal. Now, with the COVID-19 pandemic and the incoming economic recession, Indonesia should rethink its long-term policy for the sector. The global recession has slashed the demand for oil, creating a supply glut and bringing world oil prices to US$19 a barrel in April, compared to US$65 at the end of last year. April also saw a histori...