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Iran, Indonesia clinch lucrative oil deal

An oil official, while describing the largest oil deal between Iran and Indonesia, said an 8.4-billion-dollar refinery will be constructed in Java.

Iran, Indonesia clinch lucrative oil deal
(Tuesday, August 9, 2016) 16:18

Hassan Khosrojerdi, the head of Petrochemical, Gas and Oil Exporters’ Union, said all measures have been taken for construction of a 300-thousand-barrel refinery in Indonesia in collaboration with the Islamic Republic of Iran.

He estimated that the project costs will reach about 8.4 billion dollars and the refinery is scheduled to be constructed within 4.5 to 5 years; “all agreements have been reached and the Indonesian government has even allocated the land required for the project.”

Underlining that a Chinese financier and a European bank also hold partnership in construction of the crude refinery, Khosrojerdi asserted “a portion of the fund will be provided by Chinese and European parties.”

The official said the refinery's feedstock would be Iran’s heavy crude oil and the only remaining issue before launching the construction phase is inking an oil purchase contract with the National Iranian Oil Company (NIOC).

“A delegation of Indonesian oil officials including President Director & CEO of Pertamina Dwi Soetjipto have visited Iran in the current week and talks have begun for sealing the oil sale deal,” he continued.

Head of Petrochemical, Gas and Oil Exporters’ Union also noted that “Iran and Indonesia will enjoy 30 and 20 percent of the refinery’s share respectively while the remaining portion will be owned by China.”

Hassan Khosrojerdi referred to economic feasibility of refinery construction in Indonesia in view of the fall in oil prices saying “unlike crude oil, other oil products have not experienced a price decline.

“At the present time, the East Asian country is importing 800 thousand barrels of various oil products,” stated the official reiterating “no restrictions would exist for selling the output of the 300-thousand-baller complex.”

Managing Director of National Iranian Oil Company (NIOC) Ali Kardor said on Monday “the refinery project is at study phase and it will be economically justified only if the Indonesian side agrees with guaranteed purchase of crude oil form Iran.”

Also on Monday on the sidelines of an MoU signing ceremony for development of two Iranian oilfields, Pertamina CEO Dwi Soetjipto voiced Indonesia’s readiness to import Iranian crude.

Created in August 1968, Pertamina is an Indonesian state-owned oil and natural gas corporation based in Jakarta.

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