Kuwaiti petrol firm to invest in Indonesia's oil refinery: Minister

Indonesia's Industry Minister M.S. Hidayat said that state energy firm PT Pertamina and Kuwait Petroleum Corp. will invest as much as 9 billion U.S. dollars in a joint-venture oil refinery located in Balongan, West Java, with a capacity of 300,000 barrels a day, local media reported here on Friday.

The move would help cut fuel shipments into Asia's biggest gasoline and diesel importer, where dilapidated refineries cannot keep pace with local demand and the government pays billions of dollars in fuel subsidies each year.

However, no time frame was offered for the project. Previous plans to build refineries have fallen through. Hidayat said on Thursday that the Kuwaiti firm, also known as KPC, and Pertamina would sign an MOU on the project at the end of this month. "The crude oil will be supplied from Kuwait Petroleum at a discount price. This is a business-to-business negotiation with the backing of each government," Hidayat was quoted by the Jakarta Globe as saying.

Hidayat said Pertamina would take a majority stake in the project, with the output slated to serve the domestic market.

He said the state company would issue bonds and seek a loan to help finance the project. Pertamina president director Karen Agustiawan confirmed the planned joint venture and said negotiations on incentives to sweeten the deal for KPC were ongoing.
(Source:xinhua)