Indonesia is looking to build a new 300,000-barrels-per-day (bpd) state-owned refinery to reduce its dependence on imported fuels, a government official said on Thursday.
Indonesia now has about one 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.
The country is conducting a feasibility study it hopes to complete by next year on the new refinery, said Yusef Kartiwa Caryana, deputy director of the oil and gas storage and business development division at Indonesia's energy and mineral resources ministry.
The refinery, to be government-funded and operated by Pertamina, would likely be located in East Java or Sumatra and might come online by 2021, he said during the Singapore International Energy Week.
Indonesia would likely source crude from Iraq, with whom it already has an oil supply agreement, Caryana said.
Fuel prices
The country is also considering raising fuel prices next year, though this will depend on the political regime, he said.
Indonesia holds presidential elections in 2014, and fuel prices are a hot political issue, with increases often being met by protests and demonstrations across the country.
In June, the government sharply cut fuel subsidies - a move it said would save 18.4 trillion rupiah ($1.7 billion) this year for the 2014 budget.
Indonesia is also exploring other ways to reduce its fuel subsidy bill, Caryana said.
One proposal that has been discussed by Pertamina is to convert more oil-powered vehicles to compressed natural gas (CNG), he said.
It plans to get 200,000 vehicles to convert to CNG by 2018, from the current 10,000 vehicles.
It hopes to reduce fuel consumption by about four million kilolitres, a savings of about $3 billion in its fuel subsidy bill with this plan, he said.
Indonesia's subsidised fuel consumption was 45.1 million kilolitres or about 284 million barrels in 2012.
Of this, 63 percent was for gasoline, 35 percent for diesel and the rest for kerosene.
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