It Took 40-50 Years To Build A New Refinery To Become An Economic

Oil Refinery (Photo: Antara)

JAKARTA - Executive Director of the Institute for Essential Services Reform, Fabby Tumiwa, also spoke out regarding the statement of the Minister of Finance Purbaya Yudhi Sadive who stated that there was still a small number of refineries in Indonesia.

Fabby said, building a refinery takes 40 to 50 years until the products produced are economical.

"Regarding Pertamina, it is said that they are lazy to build a refinery, so it is a new economical refinery when it has been operating for 40-50 years. If it takes a period of time to that far, is there still a demand after 20 years of construction?" Fabby said at the 2025 Indonesia Energy Transition Dialogue (IETD) press conference, Monday 6 October.

According to him, to wait until the refinery reaches a break event point (BEP) or return capital, there will be a risk of reduced demand for oil and gas produced.

Fabby explained that this situation occurs a lot at large refineries abroad that are facing a declining demand situation. In fact, he said that many had started to sell their refineries because they were considered a losing business.

"The world oil demand is already peak. So many people now want to go to the refinery. Because usually the refinery is a losing business," explained Fabby.

Previously, Minister of Finance Purbaya Yudhi Sadive highlighted that energy subsidies continued to increase every year due to the high portion of fuel imports, especially diesel and diesel types.

He alluded to Pertamina's promise in 2018 which stated that it would build seven oil refineries within five years, but until now, none of these plans have been realized.

"Since then until now, I have never built a new refinery. So later, if you meet Sanantara again, ask Pertamina to build a new refinery. I once, when I was in Maritime, I once pressed them in 2018 to build a refinery," he said.

He also asked members of the DPR to participate in supervising Pertamina so that the promise does not become a discourse alone and he is ready to take firm action if the commitment is not carried out.

"They promised they would build seven new refineries within five years. Until now there is none. So please control them too. From me control, you also control. Because we have a big loss. Because where do we import from? From Singapore. Oil, oil products, oil products," he said.