An Oil Refinery That Has Never Been Built

Oil Refinery Illustration. (Photo: Pixabay)

JAKARTA - President Jokowi, when he was first inaugurated as President of the Republic of Indonesia in 2014, dreamed of building an oil refinery to meet the needs of fuel consumption in the country. But in fact, until he was re-elected as President of the Republic of Indonesia in 2019, not a single oil refinery had been completed.

The refineries that Jokowi refers to are four refinery development master plan (RDMP) projects and two new refinery development projects or grass root refineries (GRR). The four RDMP projects are the Cilacap (Central Java), Balongan (West Java), Balikpapan (East Kalimantan) and Dumai (Riau) refineries. Meanwhile, the two new refineries to be built are the Tuban (East Java) and Bontang (East Kalimantan) refineries. Overall, the investment required to finance this megaproject ranges from Rp. 500 trillion to Rp. 600 trillion.

"In our 34 years, we have never built an oil refinery, if we can build an oil refinery there will be a lot of derivatives, we don't have to import petrochemicals," said Jokowi in his opening remarks at the Opening of the National Development Planning Conference for 2020-2024 at the State Palace. , Jakarta, Monday 16 December.

Jokowi is even annoyed because until now the instructions have not been done at all. According to him, the construction of an oil refinery is important to avoid large petrochemical imports.

"The import of petrochemicals is enormous, Rp. 323 trillion of our imports of petrochemicals," explained Jokowi.

According to Jokowi, this happened because there were still people who were happy if Indonesia continued to import. "There are still those who like to import oil, I studied in detail, this is not true. Avtur is still imported, even though CPO can become aviation fuel. How come we like imports? Because there are those who like to import, our economy stagnates because of things like this," he explained.

Previously, Jokowi had expressed his suspicion about the existence of oil and gas mafias behind the stalling of refinery construction. "Imported oil is his hobby, because of what? Because the profit is big," he said.

Gajah Mada University (UGM) Energy Observer Fahmy Radhy once said that the dissolution of Petral, a subsidiary of Pertamina which is believed to be the hotbed of the oil and gas mafia, does not necessarily eliminate the oil and gas mafia.

"They still haunt the hunt for rent, using several modes. One of the modes is an effort to systematically obstruct the construction of an oil refinery, so that the volume of fuel imports will increase. Increasing the volume of fuel imports has become an easy target for the oil and gas mafia in chasing rents," he explained.

He added that for years, Pertamina had never built an oil refinery at all. In fact, the refineries that are operated by this dive are old-age refineries.

As an illustration, currently Pertamina only has six units of oil refineries with a total capacity of 1.04 million barrels per day (bpd). The six refineries are Dumai Refinery with a capacity of 170,000 bpd, Plaju Refinery 133,700 bpd, Cilacap Refinery 348,000 bpd, Balikpapan Refinery 260,000 bpd, Balongan Refinery 125,000 bpd, and Kasim Refinery 10,000 bpd.

On average, these oil refineries are old, such as the Plaju and Balikpapan refineries, which have been built since the Dutch colonial era. Due to age, these refineries cannot operate optimally, the technology is outdated, and inefficient.

Of the six existing refineries, the capacity of the refineries is designed to reach 1.04 million barrels per day (bpd), but the current production of fuel is only around 820,000 bpd. In fact, domestic fuel consumption needs reach 1.68 million bpd. This means that about half of domestic fuel demand is supplied from imports.

According to Pertamina's data, of the six processing units, only the Cilacap IV Processing Unit has a large enough production capacity, namely 348,000 bpd, and includes a refinery with the most complete facilities. This refinery is very strategic because it supplies 34% of the national fuel needs or 60% of the fuel needs in Java Island.

According to Fahmy, it was not that Pertamina did not have any efforts to build a new refinery, but every time an effort to build an oil refinery always arose systemic obstacles, which could cancel the realization of the construction of a new oil refinery.

"In fact, several investors have stated their commitment to cooperate with Pertamina to build new oil refineries, again failing halfway," said Fahmy.

He said there were indications that the oil and gas mafia was behind the failure to build new oil refineries and the RDMP project. The results of the study by the Anti Mafia Migas Team found that there were systemic obstacles to the construction of new refineries not only at Pertamina, but also appeared in several related Ministries.

"As a result of the actions of the oil and gas mafia, plans to build new oil refineries over the past decades have always failed. It is not an exaggeration to say that anyone who plays a role in inhibiting the construction of new oil refineries is part of the oil and gas mafia," said Fahmy.

Energy Watch Executive Director Mamit Setiawan did not really agree with Jokowi's speech regarding the construction of an oil refinery while Jokowi was President. "Indeed, the construction has not been completed, but the stages of construction at several refineries are being carried out," he told VOI, Tuesday, December 17.

Mamit said, the Balikpapan refinery milestone is already in the construction process. It is hoped that it will be completed in 2023 with an increase of 100 thousand barrels per day. With this increase, in the future, the total production will reach 360 thousand barrels, because currently the installed capacity in Balikpapan reaches 250 thousand barrels.

"Meanwhile, in Tuban Pertamina has collaborated with Rosneft, namely by signing the basic engineering design (BED). This is a very step forward, ”he explained.

Even so, he considered President Jokowi's words to encourage Pertamina to be more motivated in the construction of oil refineries. He admits that he remains optimistic that the RDMP and GRR projects or new refineries can support energy independence. Through RDMP and GRR, he added, domestic production increased and imports decreased.