Indonesia to import LPG from Iran

Indonesian President Joko Widodo met with his Iranian counterpart Hassan Rouhani and a number of business delegates during his two-day state visit to Iran. Both leaders expressed their commitment to taking bilateral relations to new heights by expanding economic cooperation, particularly in the energy sector.
Indonesia agreed to purchase more than 500,000 tonnes of LPG from Iran in 2017. 
“The purchase agreement ensures that price efficiency can be achieved,” Widodo said.
Iran also expressed its commitment to investing in Indonesia by building an oil refinery in East Java and a 5,000-megawatt mobile power plant in an unspecified location.
The two countries also explored the possibility of teaming up to operate two oilfields in Iran, Ab-Teymour and Mansouri.
Rouhani, who declared that Indonesia was a strategic energy partner, said Iran was ready to meet Indonesian needs for oil, gas and LPG, as well as other products, and later invited Jakarta to participate in Iran’s oil and gas industry.
Indonesian Energy and Mineral Resources Minister Ignasius Jonan, who accompanied Widodo on his state visit, said the two blocks were “lucrative” and that Indonesia’s state-owned oil and gas company Pertamina would submit a preliminary proposal on how to develop the two onshore fields in February.
Jonan said there was also a possibility for a share split with Lukoil – Russia’s second-biggest oil producer – in the two oilfields.
The cooperation between Indonesia and Iran is being seen as a part of Tehran’s attempt to breathe a new life into its energy industry, which has been paralysed by international sanctions.
The sanctions were lifted last January after the United Nations nuclear watchdog, the International Atomic Energy Agency, stated that Iran had met all the requirements agreed upon by six world powers.
Iran has the world’s biggest natural-gas reserves, which stand at 1,201.4 trillion cubic feet, according to an estimate by BP, as quoted by Bloomberg.
In August, Pertamina and its Iranian counterpart, National Iran Oil Company, signed a memorandum of understanding to carry out a preliminary study on both fields.
The NIOC previously agreed to supply Pertamina with a total volume of 600,000 tonnes of LPG for 2016 and 2017.
The first shipment of LPG, which arrived in Indonesia on October 13, marked the first time Iran had supplied gas to the country.
Widodo and Rouhani also agreed immediately to carry out efforts to increase bilateral trade amid decreasing trade activities between the two countries, said Indonesian Foreign Minister Retno Marsudi.
Bilateral trade between Indonesia and Iran amounted to US$273.1 million last year, down 39.1 per cent from 2014, according to data from the Indonesian Trade Ministry.
From January to September this year, trade slid by 16.1 per cent year on year to $178.1 million. Indonesia’s exports declined by 16.3 per cent to $144.2 million, while imports shrank by 15.2 per cent to $33.9 million.
Around 60 businesspeople joined Widodo on his visit to Iran, and they were set to meet with their counterparts yesterday.
Indonesia and Iran also signed four MoUs on the electricity industry and renewable energy; mutual legal assistance; extradition cooperation; and incentives for investment.