An Iranian oil firm and an Indonesian company are looking to build a refinery in the southeast Asian nation worth at least $3 billion, officials said, as the two countries seek stronger investment ties with the easing of sanctions on Iran, Reuters reported.
Indonesia is desperate to expand its refining capacity to be less dependent on oil imports, but attracting partners has been difficult with government talks between Kuwait Petroleum and Saudi Aramco recently stalling over tax issues.
For the last 10 years, no projects have moved beyond the initial planning stages.
Tehran-based Nakhle Barani Pardis (NBP) signed a memorandum of understanding (MoU) with PT Kreasindo Resources Indonesia to explore the feasibility of setting up the refinery, which will have a capacity to process as much as 300,000 barrels per day of heavy Iranian crude oil.
Kreasindo may also purchase for the long term up to 300,000 barrels per day from NBP, and the Iranian company is willing to invest up to 30 percent for "realization of the refinery", according to terms of the MoU.
Both companies are relatively small players in the oil industry.
"The international world needs a strong Iran, a growing Iran and an Iran that has a developed economy," Mahendra Siregar, chief of Indonesia's Investment Coordinating Board, said at a joint Indonesia-Iran business event in Jakarta on Tuesday.
"Indonesia is ready to work together and welcome good opportunities in the future," Siregar said. He also said that Indonesia's state energy firm Pertamina was looking at investment opportunities in Iran, but declined to give more details.
Indonesia now has about 1 million bpd of refining capacity that meets about two-thirds of its demand, meaning it has to import more than 500,000 bpd of fuel products to fill the gap.
Iran is emerging from international isolation after striking an interim deal with the United States, France, Germany, Britain, Russia and China to curb Tehran's nuclear work in exchange for some relaxation of sanctions.
Total trade between Iran and Indonesia has risen nearly five times over the last decade, totalling $1.26 billion in 2012, according to Indonesia's trade ministry.
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