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Indonesia : IRAQI deal to supply crude oil to INDONESIA
Publish Date : 13-Mar-2014
On 11 March 2014, Indonesia is getting closer to securing supply of 300,000 barrels of oil per day from resource-rich Iraq after high-ranking officials from both nations met in Bali.
Jero Wacik, Energy and Mineral Resources Minister said, "The Iraqi government is committed to supplying 300,000 barrels of oil per day to our refineries for at least 20 years, which can be extended."
Iraq's oil output currently stands at about 3 million barrels per day and is projected to reach 9 million bpd by 2020, which suggests that the Middle Eastern nation has plenty of reserves to provide more crude oil.
According to Jero, will serve as impetus for the Indonesian government to construct another oil refinery as part of its attempt to strengthen the country's energy security.
Representatives from both governments were in Bali for the first Indonesia-Iraq Joint Working Group on Energy, which resulted in the agreement to finalize a draft letter of intent on the crude oil supply
arrangement.
The minister said, "There are still some details to be sorted out but, in principle, the Iraqi government has agreed."
Director general of Midland Oil Company, Delman N. Abdullah, Iraq's national oil firm, confirmed Jero's remarks, adding that his government agreed to help Indonesia in constructing the refinery.
He added, "We see Indonesia as a huge market and investing in Southeast Asia is part of our policy."
Previous plans to build refineries stumbled due to fiscal incentive issues. Pertamina, the state energy company, currently runs six oil refineries with capacity to process 1.1 million barrels per day.
The government shelved its plans to use the state budget to construct $8 billion oil refinery after the project only saw lackluster progress.
Indonesia's energy consumption, is about 1.4 million barrels per day, making the issue of another refinery a matter of bolstering the nation's energy security.
There are a few major obstacles, such as the high investment costs and the issue of overcapacity in the international refining industry.
