Oiltanking to build terminal in Cilegon at cost of $120 million

Ika Krismantari, The Jakarta Post, Jakarta

Responding to the liberalization of the gasoline retailing sector, Oiltanking, the world's second largest independent tank storage provider for petroleum products, gases and chemicals, is planning to build the first independent oil storage terminal in Indonesia at a total cost of US$120 million.

The construction of the terminal, which will be located in Cilegon, Banten, will begin in April, after being delayed for almost a year due to the complexity of the project.

Oiltanking president director Theo Pangraz said Friday in Jakarta that the first phase of the terminal would have a capacity of 280,000 cubic meters (cbm), part of which had already been reserved by market players.

He said he hoped operations could commence in the second half of 2008.

"We are very confident that in a very short time, we will be able to expand the storage facilities," Pangraz said, adding that the company hoped to increase storage capacity to 600,000 cbm in the coming years.

He also said that Oiltanking was considering building storage facilities in East Kalimantan, Sumatra and Kalimantan.

"We have to see what is available, what makes sense, and where storage terminals are needed. We are looking at the whole Indonesia. We will go where our customers need us," Pangraz said.

The need for independent storage facilities is growing following the removal of state-owned oil and gas company Pertamina's monopoly on the distribution of non-subsidized high-octane fuels. Pertamina still retains the exclusive rights over subsidized fuels.

To date, only two foreign gas-station operators have actually set up shop here: Shell Indonesia (the local arm of Royal Dutch Shell Plc.), and Malaysian state oil and gas firm Petroliam Nasional Berhad (Petronas), which have opened a number of gas stations in Greater Jakarta selling high-octane fuels.

U.S.-based energy firm Chevron is currently conducting a feasibility study before deciding on whether to submit an application for a permanent license from the government to enter the retail fuel market.

Meanwhile, Total E&P Indonesie -- the local affiliate of the world's second largest liquefied natural gas producer, Total SA, is in the process of obtaining a license.

Total's corporate communications manager, Ananda Idris, has said that the company plans to build five gas stations this year at a total cost of $5 billion.

Pangraz refused to confirm whether Total and Chevron were among Oiltanking's clients, saying that the company was ready to do business with all industry players.

Oiltanking, a division of Germany's Marquard & Bahls AG, owns and operates 72 terminals in 19 countries in Europe, North and South America, the Middle East and Asia. The group has an overall capacity of 11.9 million cbm.