Indonesia issues regulation on mini refineries

(AGI) - Jakarta, Aug. 12 - Indonesia's Ministry of Energy and Mineral Resources has issued to a regulation to encourage the development of small-scale refineries. The Ministerial Regulation No 22/2016 on the Implementation of the Development of Small-Scale Refineries Domestically was signed on July 25, 2016 by then Minister Sudirman Said, the Directorate General of Oil and Gas said in a statement. The regulation aims to support the national energy resilience, provide more supplies of fuel on the domestic market, improve efficiency in oil and gas upstream activities particularly in marginal fields, reduce dependence on fuel imports and maximize the utilization of locally-produced oil and condensate, and drive the national and regional economy, the directorate general said. The regulation categorizes small-scale refineries as those with a maximum capacity of 20,000 barrels of oil per day (bpd). The mini refineries can be built inside or outside of the clusters designated by the director general of oil and gas while taking as reference the recommendation from Indonesia's upstream authority SKK Migas which at least contains the production profile and potential reserves of the fields that will supply crude to the refineries. The developers of the mini refineries are obliged to use environmentally-friendly technology, use locally-produced products and prioritize local manpower. To make it viable economically, a mini refinery project may be provided with fiscal and non-fiscal incentives pursuant to the existing regulations or be integrated with petrochemical production. Mini refinery projects inside the clusters designated by the government may be developed by the government or business entities. In case the government wants to develop a project by itself, it will assign state owned oil and gas firm PT Pertamina (Persero) to do so using state budget or corporate budget. Business entities, which want to develop mini refineries inside the clusters designated by the government, must file application with the ministry through the directorate general. The interested business entities will be selected by a team comprising of officials from the directorate general of oil and gas, SKK Migas, BPH Migas and the Center of Research and Development of Oil and Gas Technology (Lemigas). The selection team will prepare selection documents which at least contain production profile and potential oil reserve, crude essay, Indonesian crude price formula. After selecting and evaluating the business entities, the team will propose to the director general of oil and gas the names of the selected business entities as well as the price formula of the crude for the mini refinery projects. In case there aren't business entities which are interested in the projects inside of the cluster, the government may assign Pertamina to develop the projects. Mini refinery developers may use imported crude as feedstock. Permits that have been issued for developers of mini refinery projects are still valid until their expiry dates. (AGI) .