Industry Trend Analysis - Headwinds Aplenty For Downstream Expansion Plan - APR 2017

BMI View: Indonesia has ambitious plans to significantly boost its refining capacity over the next decade, alt hough a myriad of regulatory and financial barriers mean that only a few projects are included in our forecasts.

Indonesia is looking to build a greenfield refinery in Bontang, East Kalimantan, as it seeks to greatly expand domestic refining capacity to fill a persistent and growing refined fuels deficit at home. The proposed facility will have a production capacity of 300,000b/d, and would require investment in the region of USD10.0-12.0bn. Pertamina is on the lookout for a strategic partner to take a majority stake in the project, and is targeting to begin construction in 2019, and to bring the facility online by 2023. Concrete bids are yet to emerge, though the project is reportedly the subject of interest from firms in the Middle East, Russia and Japan.

The proposed construction of a refinery in Bontang is aligned with Indonesia's ongoing efforts to massively expand domestic refining capacity over the coming years. At present, Pertamina operates seven refineries in the country with combined nameplate capacity of 1.05mn b/d. However, Indonesia still suffers from a fuel deficit of over 800,000b/d, which is on course to surpass 1.2mn b/d by 2026, if no new capacity is added.

Fuels Deficit To Grow
Indonesia - Refining Capacity, Refined Fuels Production & Consumption
e/f = BMI estimate/forecast. Source: National Sources, BMI

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