Construction Of Oil Refinery Capacity 1 Million Barrels Save Imports 9 Billion US Dollars

Minister of Industry (Menperin) Agus Gumiwang Kartasasmita expressed her support for the efforts of the Ministry of Energy and Mineral Resources (ESDM) which will build several oil refineries with a total capacity of up to 1 million barrels per day.

The construction of this oil refinery is believed to increase energy security and industrial resilience, especially in the petrochemical industry sector.

Moreover, Agus said, so far the petrochemical industry has played a very important role in supplying raw material needs to a number of other industrial sectors.

"We strongly support the construction of this refinery in order to strengthen upstream in the petrochemical sector in order to lead to import substitution and can have a positive impact on strengthening added value and investment to absorbing labor," Agus said in his official statement, Thursday, March 13.

Agus explained that the construction of this oil refinery will optimize the production of nafta which is a raw material requirement for a number of industrial sectors.

"We also support the Attorney General's Office's efforts to improve domestic oil management which will optimize the process of all refinery in Indonesia to produce fuel and nafta," he said.

The Minister of Industry is optimistic that the construction of this oil refinery, apart from realizing the government's vision in an effort to accelerate the downstream program, will also be a game changer in encouraging the growth of the petrochemical industry in Indonesia.

"Of course we will coordinate with the Ministry of Energy and Mineral Resources and the Ministry of Investment regarding the addition of this refinery. Refinery development will be distributed in several parts of Indonesia," he said.

Please note, nafta is one of the fractions of petroleum that can be used as a raw material for gasoline or petrochemicals.

This fraction is generated primarily through crude oil distillation process at the Crude DistILLation Unit (CDU).

Currently, the production of nafta for 1 million tons per year requires around 3.03 million tons per year of crude oil.

"In the formulation of crude oil, it will produce 20 percent of nafta. It also depends on the heating process or the boiling point," explained Agus.

Meanwhile, until now Indonesia only has six oil refineries and all of them are investments that are very old.

As for the six oil refineries, only 7.1 million tons of nafta are able to produce per year.

Meanwhile, the current national demand for nafta reaches 9.2 million tons per year, so imports of 2.1 million tons are still needed.

This means that it is necessary to increase the domestic production capacity of nafta.

According to Agus, nafta is a mother of petrochemicals, which if domestically produced can save up to USD 9 billion in imports per year.

Nafta is one of the fractions of petroleum that can be used as a raw material for gasoline or petrochemicals.

In addition, it has an impact on job creation and increased national production for the independence of domestic pharmaceutical raw materials.

"Currently, there are several large petrochemical projects that will soon operate and require a nafta of approximately 8 million tons per year," he said.

Therefore, in supporting the addition of oil refineries in Indonesia, the Ministry of Industry has proposed to the Ministry of Energy and Mineral Resources to build a new oil refinery in the Tuban area, East Java, which currently has a petrochemical factory, namely PT TPPI.

PT TPPI currently has two production modes, namely petrochemicals and fuel.

It is known, most of the raw materials used to produce aromatic products come from condensates.

Not only that, PT TPPI also produces nafta which is used to produce gasoline/fuel.

"This means that Tuban is a large industrial center with the main sector including cement, petrochemicals, oil and gas and the maritime industry," said Agus.

This is in line with PT Pertamina's plan to develop a GRR project plan and will become an integrated factory that processes crude oil into fuel and petrochemical products with high added value.