Iran to Build Refinery in Indonesia

Iran to Build Refinery  in Indonesia Iran to Build Refinery  in Indonesia

Iran has agreed to build a crude oil refinery in Indonesia following President Hassan Rouhani's recent visit to Jakarta, Fars news agency reported.

The project is aimed at refining Iranian crude, director of international affairs at the National Iranian Oil Company (NIOC), Seyyed Mohsen Ghamsari, said. "It is expected that construction of the refinery will accelerate pursuant to the agreement reached between the two sides."

Last week, a delegation from Iran's oil ministry held meetings with Indonesia's energy minister, Sudirman Said, in which agreements were reached on construction of a refinery, with a capacity to refine 150,000 barrels of oil per day (bpd). A high-ranking Indonesian delegation will soon visit Tehran to discuss terms of the contract.  Iran, Indonesia, and Malaysia will jointly cooperate in construction of the $3 billion refinery. Iran and Indonesia will each undertake 40 percent of the project, while the Malaysian share will be 20 percent.

Indonesia now has about one million bpd of refining capacity that meets about two-thirds of its demand.It has to import more than 500,000 bpd of fuel products to fill the gap. Therefore, it is eager to expand its refining capacity to be less dependent on oil imports, and is seeking Iran's assistance.

"The [Indonesian] President Joko Widodo asked the minister of energy and mineral resources to discuss cooperation with Iran," Indonesian ambassador to the Islamic Republic of Iran, Dian Wirengjurit said in a press conference at the International Media Center of the 60th Anniversary of the Asian African Conference (AAC), in Jakarta, on April 23.

The oil refinery project has been pending since 2006 due to Indonesia’s concerns in the follow up of cooperation related to Western sanctions against Iran's nuclear program. However, "President Joko Widodo reaffirmed that we will continue to cooperate," Dian said, adding that Iran will offer help to Indonesia on how to cooperate so that western sanctions against Iran are not problematic to both sides.

"The president will instruct Bank of Indonesia (BI) to visit Iran in the near future to deal with financial issues," Dian said with reference to financial sanctions against Iran.

Iran and Brazil have also signed a memorandum of understanding to build a new oil refinery in Latin America. Iran is also in talks with an Indian company to build a refinery in India with the capacity to process 400,000 barrels of crude oil.

The US and its allies imposed tough sanctions on Iran to curb the country's nuclear program which they claim is geared to military use. Iran insists its program is peaceful. Iran and the P5+1 group ( five permanent members of the UN Security Council, namely United States, Russia, China, United Kingdom, and France, plus Germany) are negotiating to reach a final agreement by a June 30 deadline.