Azerbaijan to build $4.8b oil refinery and aluminum plant in RI

Azerbaijan, one of Indonesia’s major suppliers of oil, was planning to build a US$4.8 billion oil refinery in Batam and an aluminum plant in Kalimantan to cement the increasingly close relations between the South Caucasus nation and Southeast Asia’s largest economy, a top Azerbaijani diplomat said.

“Our state oil company, SOCAR, is in negotiations with Indonesia’s OSO Group to build a large oil refinery in Batam. There is no final decision yet on the project; it is being considered,” Azerbaijani Ambassador to Indonesia Tamerlan Karayev told The Jakarta Post on the sidelines celebrations marking the 90th anniversary of the birth of Azerbaijan’s foremost national leader, the late Heydar Aliyev, on Friday.

Karayev noted that bilateral ties were growing fast. Several high-level visits, including Coordinating Economic Minister Hatta Rajasa’s visit in 2012 and a recent visit by House of Representatives’ Speaker Marzuki Alie to Azerbaijan and his Azerbaijan counterpart, Oqtay Asadov’s, visit to Jakarta, have taken place in the last two years.

“We are currently negotiating 14 bilateral agreements with Indonesia, which will be signed during our president’s visit to Indonesia next year,” he added.

Karayev said Baku was very interested in further strengthening the two decades’ friendship by investing in several strategic projects.

“The oil refinery in Batam is one of them. Our Delta Group is also currently mulling a plan to build an aluminum plant in Kalimantan. We are also interested in building a fertilizer plant in Indonesia,” Karayev said.

It was the first official confirmation from Azerbaijan that both countries were holding talks over the much-needed oil refinery in Indonesia. The project details were first unveiled by the OSO Group’s CEO, Mariano Asril, to Reuters in October.

He said OSO would build the $4.8 billion refinery, with a planned production capacity of 600,000 barrels per day (bpd), in a joint venture with SOCAR. Azerbaijan will provide the major funding as well as crude oil for the refinery. The project, if it materializes, will be completed in 2017.

Azerbaijan, an oil-rich nation in South Caucasus, exports around $2 billion worth of oil to Indonesia, of which $1.23 billion is exported directly (Indonesia’s eighth-largest supplier) and the rest indirectly via Singapore and other countries.