Racing Towards Tuban

The Government's decision to choose Russian petroleum conglomerate Rosneft to manage construction of East Java's Tuban oil refinery must be seen from two perspectives. Firstly, because it has been such a long time since a refinery has been built in Indonesia, it is the right decision. Secondly, no matter how urgent, the appointment of Rosneft should have been processed in a more transparent manner. The refinery is a major project, worth hundreds of trillions of rupiah. As such, there is massive potential for corruption. With greater degree of transparency, the Government can avoid the involvement of the oil mafia and the usual crowd of rent-seekers.

The memorandum of understanding between state oil and gas company Pertamina and Rosneft was signed in Jakarta more than a fortnight ago. This stemmed from President Joko Widodo's visit to Russia the previous week. Soon after arriving in Sochi, where the ASEAN-Russia summit was being held, Widodo met with Rosneft chief executive Igor Sechin. The meeting ended in an agreement between Rosneft and Pertamina to collaborate in the building of the 300,000 barrel-a-day, Rp190 trillion (US$14 billion) refinery, which is expected to be completed in 2021.

June 7, 2016