Energy MoU Signed With Indonesia

Energy MoU Signed With IndonesiaEnergy MoU Signed With Indonesia

Iran and Indonesia signed a memorandum of understanding on cooperation in oil, gas and petrochemical projects, as well as expansion of bilateral energy ties, between this month in the city of Bogor, southern Jakarta on Java Island.

An Iranian energy delegation has traveled to Indonesia to hold a joint forum in oil, gas and petrochemical fields. The agreement seeks to exchange expertise, in addition to oil and gas technology transfer, to give a boost to both countries' oil and gas production and export, IRNA reported.

Stressing on developing mutual energy collaboration, the two sides agreed on promoting their cooperation to build refineries. According to Indonesia's Minister of Energy and Mineral Resources Sudirman Said, Indonesia is interested in resuming its energy relations with Iran, one of the biggest oil producers, in post-sanctions era in oil and gas sectors.

"There is a wide range of opportunities for mutual cooperation, including crude, gas condensates and natural gas import from Iran, building a chemical fertilizer factory in Iran as well as investing in hydroelectric sector," he said.

Pointing to the agreement in upstream oil sector and technology and data exchange, director general of Indonesia’s policy and regulation creator and service executor for the oil and gas industry, Wiratmaja Puja, added that refinery development plans in Indonesia and crude import from Iran are being scrutinized. The energy memorandum was concluded in the presence of Valiollah Mohammadi Nasrabadi, Iran’s ambassador in Jakarta, Marzieh Riahi, deputy oil minister for Asia-Pacific Affairs, Sudirman and Wiratmaja.

Accompanied by Indonesian Economy Minister Sofyan Djalil, Sudirman had previously visited Tehran in May 2015 and attended the 11th Iran-Indonesia Economic Cooperation Commission, during which the two sides signed a memorandum of agreement regarding cooperation in oil and energy sectors.

Based on the previous agreement, Iran pledged to establish small-scale oil refineries with a production capacity of 300,000 barrels per day in Indonesia. The project requires about $3 billion of investment, 60% of which will be supplied by the Indonesians and the rest by Iran.

Iran also agreed to build 48 small-scale hydroelectric power plants in the Southeast Asian country over the next five years.

Trade between Iran and Indonesia stood at $430 million in 2014. Before the intensification of economic sanctions on Iran in 2012, it amounted to $2 billion.

“Indonesia is in dire need of bitumen and gas, and Iranians have expressed interest in meeting the country’s bitumen demand and cooperating in Indonesia’ electricity sector during previous discussions,” Sudirman said.

Indonesia's oil output stands at 817,000 barrels per day and to meet its energy needs, it has to import as many barrels as it produces. Based on projections, the Southeast Asian country's oil production will suffer a downward trend in the next five years.

The country produced 942 bpd in 2010, whereas it will decline to 550,000 bpd by 2020 from its current output standing at 835,000 bpd.

Hamid Sharif-Razi, executive director of National Iranian Oil Engineering and Construction Company, has recently announced that serious negotiations are underway not only to construct refineries but also buy such stakes in Malaysia and Indonesia.

In line with the Oil Ministry's policy to either build or buy the stakes of refining complexes in other states, plans have been made to have a 40% contribution to a 300,000-barrel-per-day refinery in Indonesia.