Jakarta Keen on Expanding Oil Trade

Indonesia's volume of crude oil imports from Iran can increase, said Octavino Alimudin, the Indonesian ambassador to Tehran, in a meeting with the Chairman of Iran Chamber of Commerce, Industries, Mines and Agriculture Gholamreza Shafei in Tehran on Sunday.

"Indonesia purchased $88 million worth of petroleum products from Iran in 2016 and plans  to raise the figure to $220 million," Alimudin said, noting that Jakarta is willing to further expand its oil trade with Tehran, Shana reported Monday.

"Iran and Indonesia intend to augment bilateral trade to $2 billion in 2017," he said, adding that an Indonesian delegation is to visit Tehran in the coming weeks to discuss prospects for collaboration in economic and energy projects. The two sides signed a memorandum of understanding last year to collaborate in oil, gas and petrochemical projects, as well as expansion of energy ties. 

The agreement calls for exchange of expertise, in addition to oil and gas technology transfer, to give a boost to both countries' oil and gas production and export.

Indonesia's oil output stands at around 800,000 barrels per day but to meet domestic energy demand, the Southeast Asian economy imports nearly as many barrels as it produces. Based on projections, Indonesia's oil production will see a downward trend in the next five years.

The country produced an average of 942,000 bpd in 2010, but forecasts say the output could dwindle to 550,000 bpd by 2020.

According to Shafei, boosting business ties with East and Southeast Asia is a priority for Iran and "among those nations, Indonesia has high capacity to expand commercial activities with Iran. Referring to a trilateral preliminary agreement between Iran, China and Indonesia on building an ultra-heavy crude refinery, worth $8.4 billion, on Java Island off Indonesia, Shafei noted that the construction project has made good progress.

  First Oil Cargo

According to Dwi Soetjipto, managing director of Indonesia’s state-owned oil firm Pertamina, the company received a 1-million-barrel cargo from the National Iranian Oil Company in September to check whether it is compatible with their refinery standards.

Concurrent with Indonesia’s intake of its first Iranian oil cargo, Tehran and Jakarta are negotiating to invest in joint upstream and downstream projects.

National Iranian Oil Company and Pertamina signed a nondisclosure agreement in August last year under which, Pertamina surveyed Iran’s onshore Abteymour and Mansouri oilfields and submitted its master development plan for scrutiny. Indonesian officials say they are awaiting NIOC's decision on the two oilfields.