Indonesian President Joko Widodo on Monday urged ministers to focus more attention on the expansion of the oil processing units’ refinery capacity and construction.
This is in a bid to bring down current account and trade deficits.
The president also asked them to focus on efforts to boost oil lifting and make the government’s biodiesel programme a reality.
Indonesia’s oil refineries only produce 600,000 to 650,000 barrels of oil per day, comprising gasoline and diesel oil, while the country needs 1.3 to 1.4 million barrels oil per day.
Consequently, import has to be conducted to fill the gap, according to Ignatius Tallulembang, state oil and gas firm PT Pertamina’s director of refinery and petrochemical mega-projects.
The Southeast Asia’s biggest economy has to ship oil to comply with rising domestic demands amid accelerating economic growth, according to PT Pertamina.
The shipments have contributed the most to the country’s current account and trade deficit gaps, especially when the U.S. dollar was stronger than rupiah, ratcheting up cost of imports. Besides, a wide gap of the deficit could lead the country to be vulnerable on speculation acts by financial speculators.
“Therefore, oil refinery development has to be put on priority and oil lifting must also be boosted,” he told a cabinet meeting at the Presidential Palace.
Widodo asked the ministers to escort the government’s renewable energy program, such as biodiesel use with a 20 percent bio-content, also known as B20.
Indonesia’s oil and gas sector recorded a 8.57 billion U.S. dollar deficit last year, according to data from the National Bureau of Statistics.
According to the country’s oil and gas upstream regulator, Indonesia’s crude oil production peaked at 1.7 million barrels per day in mid-1990s.
It said, however, that the lackluster of recoveries of new reserves in recent years has, among other factors, reduced output by about half, thus turning the country into a net oil importer,
To pare further downshift in oil output, the government has scrambled to stave off obstacles in the country’s oil and gas upstream industry, including taking down some rules and poor bureaucracy, which had weighted down efforts to entice investment in the sector.