Iran, Indonesia to establish joint company for oil products exports
Tehran, Iran, Nov. 14
By Milad Fashtami - Trend:
Iran and Indonesia plan to establish a joint company to facilitate oil products and petrochemicals exports from Tehran to Jakarta.
Mehdi Sharifi Niknafs, the Managing Director of Iran Petrochemical Commercial Company, said that the issue was included in a Memorandum of Understanding which was signed between the two countries recently, Iran's SHANA News Agency reported on Nov. 14.
He went on no note that Indonesia is willing to increase its oil products imports from Iran.
"During the recent visit of Iranian delegation to Indonesia, the two sides discussed possible ways to increase bilateral relations in the oil sector," he said.
"We seek to stablish a storage unit in one of the free trade zones of Indonesia to store our oil products," Niknafs added.
Reuters reported in February that 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.
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 previously.
"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.