Azerbaijan Plans Joint Venture with Indonesia for 600,000-Barrel-Per-Day Refinery

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Written by Richard Finlayson, Senior International Editor for Industrial Info (Sugar Land, Texas)--As one of Indonesia's main oil suppliers, Azerbaijan is following through on a two-decade-long trading relationship between the two countries by planning a $4.8 billion oil refinery in Batam, a free-trade zone that is 20 kilometers off Singapore's south coast.

Although the project has not been fully confirmed, both countries report that negotiations on the project are ongoing and that Azerbaijan's state-owned oil company SOCAR (Baku) is discussing a joint venture (JV) for the construction of the 600,000-barrel-per-day plant. Reliable sources say that the deal is done and that the project is going ahead.

Indonesia's OSO Group (Jakarta) reported that Azerbaijan will provide the major funding for the project and the crude oil feed for the refinery. Plans currently under discussion envisage a completion date for the project in 2017.

Tamerlan Karayev, Azerbaijani ambassador to Indonesia, said that the two countries were currently negotiating 14 bilateral agreements, which will be signed next year. The ambassador said that the Azerbaijani government was interested in strengthening ties by investing in a number of strategic projects.

"The oil refinery is one of them, and the Delta Group (Baku, Azerbaijan) is also currently mulling a plan to build an aluminum plant in Kalimantan," he said. "We are also interested in building a fertilizer plant in Indonesia."

Azerbaijan, in the South Caucasus, exports about $2 billion of oil annually to Indonesia, of which $1.23 billion is exported directly. The balance comes through Singapore and other countries.

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