Russian Sweet Promises

In conjunction with the visit of Indonesian President Joko Widodo to Russia in mid-May, state-owned oil and gas company Pertamina named Russian oil company Rosneft the winner of the tender to build the Tuban refinery in East Java. This decision has raised questions because the government had already signaled that it would likely appoint Saudi Aramco, a Saudi oil company, to work on the project.

Despite being a new player in Indonesia's petroleum business, this giant Russian oil and gas company was able to convince the government and Pertamina to make it their partner. In addition to building a refinery with a production capacity of 300,000 barrels per day, the company will cooperate with Pertamina to explore oil fields in Russia. Pertamina was promised it can take 35,000 barrels per day from oil wells with reserves of 200 million barrels.

June 7, 2016