Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia has revealed that Indonesian state energy company PT Pertamina and Russian energy company Rosneft are expected to decide on their Final Investment Decision (FID) next month.
“We help with land clearing, provide incentive and issue permits. I have not delved into the issue. I will check its details, “ Bahlil said on Friday, October 18, 2024.
As earlier reported by Indonesia Business Post, the investment by Rosneft Singapore Pte Ltd, an affiliate of the Russian oil company Rosneft, in the strategic national project Grass Root Refinery (GRR) in Tuban, East Java, had been interupted due to the escalating geopolitical situation resulting from the war in Ukraine.
Bahlil, then Minister of Investment/Head of the Investment Coordinating Board (BKPM) in the 2023, revealed that Rosneft was among companies which claimed to have resolved their investment issues with a potential investment of Rp211.9 trillion (US$14.8 billion).
Then Deputy for Investment Climate Development at the Ministry of Investment/BKPM Yuliot Tanjung said the facilitation provided by the BKPM to Rosneft was related to land acquisition for the construction of the Tuban Refinery project. However, he acknowledged that Rosneft’s investment was disrupted by Western countries’ embargoes due to the Russia-Ukraine conflict.
Russia has had difficulties in continuing its investment due to sanctions imposed by Western countries following Russia’s invasion into Ukraine in early 2022. Sanctions against Rosneft target funding access, technology, and refinery construction services.
Discussions are ongoing between Pertamina and Rosneft to determine the fate of the national strategic project, estimated to involve an investment of US$13.5 billion.
Chairman of the Committee for the Acceleration of Priority Infrastructure Delivery (KPPIP) under the Coordinating Ministry for the Economy, Wahyu Utomo, said Pertamina is still seeking a strategic partner to support the GRR Tuban project, both for technology and financing.
“Once a new partner is found, Pertamina expects government intervention, both fiscal and non-fiscal, for the construction of the refinery, as the project’s value is significant while Pertamina’s equity is limited,” Wahyu said.
The ESDM ministry has set a deadline for the FID on the GRR Tuban until end of this year. Then Director General of Oil and Gas at the ESDM ministry, Tutuka Ariadji, earlier said that recent Western sanctions did not directly affect Rosneft. He, therefore, believed the project could still proceed to determine the FID for the new refinery construction.
Then ESDM Minister Arifin Tasrif also sought clarification on Rosneft’s continuing investment with then Russian Ambassador to Indonesia Lyudmila Georgievna Vorobieva last year.
