The Ministry of Energy and Mineral Resources (ESDM) has reported that the progress of the Grass Root Refinery (GRR) project, commonly known as the Tuban Refinery, is currently hindered by geopolitical challenges.
“Russia is still committed to the project, but there are certain considerations we need to take into account,” Minister of Energy and Mineral Resources, Arifin Tasrif, said as quoted by Katadata.co.id during a working visit to East Kalimantan on Sunday, August 11, 2024.
The Tuban Refinery project is a collaboration between Indonesia’s state-owned oil and gas company, Pertamina, and Russian oil giant Rosneft. The two companies signed a design contract for the project with the selected contractor back in October 2019.
The project, which involves an investment of approximately US$3.8 billion (Rp54.2 trillion), is designed to have a processing capacity of 300,000 barrels per day.
Once operational, it is expected to produce 30 million liters of fuel per day, including gasoline and diesel.
Arifin emphasized that the success of the Tuban Refinery project is crucial for improving Indonesia’s fuel production capabilities.
He noted that the refinery’s capacity of 300,000 barrels per day could significantly reduce the country’s reliance on imported oil and fuel.
“We currently lack about 300,000 barrels per day in capacity, so the Tuban GRR project could fulfill that need if it becomes operational,” he explained.
Given the importance of the project, Arifin stated that efforts will continue to push the development of the Tuban GRR project forward.
Previously, Minister of Investment Bahlil Lahadalia mentioned that the imposition of a plastic excise tax has been one of the factors delaying Rosneft’s investment in Indonesia.
According to Bahlil, the primary reason for Rosneft’s delay in investing in the national petrochemical sector is the ongoing geopolitical conflict between Russia and Ukraine.
“Rosneft is currently strategizing to mitigate the impact of the conflict and ensure the continuation of its investments, including addressing the issue of plastic excise,” Bahlil said on July 29, 2024.
He also revealed that Rosneft and Pertamina are renegotiating their investment plans in Indonesia. The government has prepared alternative partners should the negotiations with Rosneft fall through.
However, Bahlil stressed that Rosneft remains Pertamina’s primary partner in developing the petrochemical industry in Tuban.
“There are a few alternative partners for Pertamina in Tuban, but as of now, it’s still Rosneft,” he said.
