In 2012, Indonesia’s imports from Qatar, mostly petrochemicals, oil and gas, touched $600mn while its exports to Qatar, comprising mainly home appliances, food products and automobile parts, were worth just $74mn
By Dr Arno Maierbrugger/investvine.com
Indonesia, the largest economy and the most populous country in Southeast Asia, is opening up for more oil-related investments. First of all, the country is in dire need for new oil refineries to meet the domestic demand of its ever-growing 240mn population that is becoming increasingly mobile.
The last oil refinery in Indonesia was built in 1994 under the Suharto regime, and demand for petrol has spiralled since. Lately, the Indonesian finance ministry has been considering whether to give incentives to Saudi Aramco and Kuwait Petroleum for refineries that the firms want to build together with Indonesia’s state oil firm Pertamina. However, negotiations have stalled because of certain demands of the investors related to duties and the source of imported oil. Indonesia has now even asked the Iraq government if it would be willing to invest in downstream activities.
This could open up a window for Qatar, which already has made a good experience with large investments in Indonesia, namely in the telecommunications and banking sector (through Qatar Telecom/Ooredoo and QNB). Qatar has also set up a joint investment fund worth $1bn some time ago with a focus on mineral resources and infrastructure projects, and has repeatedly reiterated its interest to dig further into the Indonesian economy, mainly to level the trade balance between the two countries.
In 2012, Indonesia’s imports from Qatar, mostly petrochemicals, oil and gas, touched $600mn while its exports to Qatar, comprising mainly home appliances, food products and automobile parts, were worth just $74mn.
The mentioned refineries would require a combined investment of around $20bn and would each have a production capacity of 300,000 bpd when complete. Qatar could use the investment to provide refineries with oil, a move that would greatly impact the trade balance of the two countries.
“The door is open to form business-to-business partnerships,” Indonesia’s energy and mineral resources ministry’s director general for oil and gas, Edy Hermantoro, recently said.
Moreover, Indonesia is now pushing its ‘Masterplan for Acceleration and Expansion of Indonesia’s Economic Development,’ a directive for the country’s economic development that started in 2011 and runs up to the year 2025.
The acceleration and expansion programme identifies six main economic corridors as growth centres where Indonesia also hopes to find Qatari investors and businesses, located in Java, Sumatra, Kalimantan, Sulawesi, Bail and Papua, of which Sumatra has been identified as the place for processing the country’s natural resources and energy reserves?.
An investment or a partnership in the downstream oil and gas business could be a major step for Qatar to intensify and strengthen its ties with Indonesia, a country that is forecast to grow its GDP by above 6% for the years to come.
*Our columnist Dr Arno Maierbrugger is Editor-in-Chief of www.investvine.com, a news portal owned by Inside Investor focusing on Southeast Asian economic topics as well as trade and investment relations between Asean and the GCC. The views expressed are his own.