Only Need Price Certainty

Is the mini refinery business still potential? Still. Why still? Because there are still many oil-producing regions. The oil-producing regions in 55 districts are far from other areas, BBM [fuel oil] is also far away. Then what about the area where there is no well? Yes, we bring the crude, we build a mini refinery there.

The government brings crude there so that the government is more fortunate to only bring crude. The crude ship costs less than the fuel ship. Then, the losses are also not much compared to carrying fuel, but mini-refineries are not a 100% solution for Indonesia, no.

There must still be large refineries to accommodate large areas to meet the needs in Jakarta, Surabaya cannot use mini-refineries. The challenge of developing a mini refinery? The challenge is that the government must be firm because the mini refineries are made from local crude. Do you want the government to provide the allocation of crude for mini refinery investors? Not bring crude to the distant export point earlier. That's the challenge.

If the Ministerial Regulation already exists now. What do you want to implement? Maybe you want to, but you can't do it now because you might be bound by a contract. We don't know either. It could be why the government cannot be implemented today because maybe the pipeline is already there a contract is underway maybe five years, ten years from now will be completed.

We don't know the contract. Depending on the courage of the government determines the attitude here. Mini refinery investors do not need to be given incentives or discounted price incentives at the mouth of the well. Government, the COST is cut. If it has been given, many want to invest as long as it's fair so don't charge the US $ 10, only US $ 1 is replaced.

What do investors need to build mini refineries? First the clarity of the delivery point. Second, the period is how many years. Third, the oil specifications. Fourth, what is the price of oil in the Well? Only four are needed, we immediately surveyed for the Feasibility Study. Why is the handover point necessary? Later the delivery point in the middle of the forest, the road is not there yet then another price.

The point is needed to study. So the government has just made it in the media, that the government is interested in auctioning eight clusters, but it has never been mentioned to date, the four items mentioned earlier. At what point of delivery, what price is in the well, what kind of oil specifications, how many years is the volume is given, for example, 10,000 BPD, how many years? With these four items, if it is clear, we can easily calculate whether we will participate or not participate.

If Tri Wahana Universal (TWU) was asked what it looks like, TWU once made our government letters interested in six locations, but it is not yet known as these four aspects come out we are not necessarily interested.

I am sure the government will not fool around. How much is a mini refinery investment? For the TWU refinery, an investment of US $ 125 million is needed to design 18,000 BPD. Usually, our mini refineries operate 90% or 82% of the design capacity.

Currently operating 16,000 BPD. Next development plan? Obviously, it can't develop here because it's only 16,000 BPD. But we are interested in this cluster if we truly enter the economy. We are currently waiting for data from the government that will be issued as bidders after being stopped, can the TWU refinery be fully operational now? TWU was given an allocation of 16,000, already written in a letter and the Director-General of Oil and Gas.

We are waiting for prices at the mouth of the well. Once the price is finished at the mouth of the well, we apply 16,000. The allocation of 6,000 has always been, of which 10,000 have been included in the letter from the Director-General. 

    So we are waiting for prices in the well and an allocation of 10,000 BPD. The number already knows, but from whom we don't know yet. We are waiting because if this is about the price at the mouth of the well and the source of the allocation does not come out, how can the Government want to tender the refinery?

Bisnis Indonesia, Page-30, Friday, Oct 14, 2016.