Indonesia, Russia business ties hit new high
THE BUSINESS partnership of Indonesia and Russia marked a new high with companies from both countries on track to seal deals worth US$15.8 billion (Bt564 billion) for oil refinery and power plant projects.
Indonesia and Russia’s oil and gas giants Pertamina and Rosneft will sign a $13.8 billion deal to develop the Tuban refinery in East Java, which is crucial in the country’s drive to reduce reliance on oil imports.
“There is a strong interest from both countries to grow the partnership,” Russian President Vladimir Putin told a joint press conference after meeting with Indonesian President Joko “Jokowi” Widodo in Sochi, Russia, mulling a potential free trade zone.
He also unveiled an investment interest from Russia’s Inter RAO for 1.8-gigawatt power plant projects worth $2.8 billion.
Russia’s transportation and infrastructure firm JSC Russian Railways (RZD) is also interested in developing a passenger rail track in East Kalimantan province.
Putin met with Jokowi ahead of the two-day Asean-Russia Summit that began on Thursday.
“We agreed to boost Russia’s investment in Indonesia, in the sectors of maritime, infrastructure such as railway and port in Kalimantan, oil, energy and electricity,” Jokowi said.
Russia’s investment in Indonesia at the end of last year stood merely at $1 million, out of the total $29.27 billion foreign direct investment coming into the country. The figure is also lower than the $3.6 million investment in 2014.
On Friday, Jokowi and the Indonesian delegation met with Rosneft, which controls more than 40 per cent of Russia’s oil production, marking a new beginning for both countries’ business relations, as well as for the Tuban block and Pertamina.
The official business agreement was set to be signed on Thursday in Jakarta.
Pertamina had held a beauty contest that included Saudi Arabia’s Aramco, Kuwait’s Petroleum International, China’s Sinopec, India’s Indian Oil and a consortium consisting of Thailand’s PTT Global Chemical and Thai Oil.
With a new refinery to be developed with Rosneft, Pertamina seeks to produce 300,000 barrels of oil per day. The firms will establish a joint venture with Pertamina holding 55 per cent and Rosneft controlling 45 per cent.
“The president wants the joint venture to be created before year-end and to establish a storage at the site. Rosneft said that it was committed to making Tuban a regional hub,” State-Owned Enterprises Minister Rini Soemarno told a group of journalists after the meeting.
Construction of the refinery is expected to begin in late 2017 or early 2018. Rosneft will be given a 40-year land development permit that can be extended for 10 years.
In addition to the refinery construction, next week’s agreement will also pave the way for Pertamina to work on Rosneft’s oil fields in Russia.
