Government of Indonesia Cancels Construction Cilamaya Seaport
The government of Indonesia decided to relocate the planned Cilamaya deep seaport project in West Java to a different location (possibly Subang or Indramayu) as the initially proposed location is too closely located to an oil and gas block operated by Pertamina Hulu Energi Offshore North West Java, a subsidiary of state-owned energy company Pertamina. Indonesian Vice President Jusuf Kalla said that it would be dangerous to construct the seaport close to this block as there is a high likelihood that ships will hit oil and gas rigs.
Construction of the IDR 34.5 trillion (USD $2.6 billion) Cilamaya Seaport had been continuously delayed since 2010 (and is now cancelled altogether) on concern that offshore oil and gas production would be disrupted. Although Pertamina’s block is currently only running at half of the block’s full capacity, oil and gas production at the block is an important asset to the country. Oil production at the block currently stands at approximately 40,000 barrels of oil per day and gas production stands at 180 million standard cubic feet of gas per day. When the block reaches full production capacity, it is expected to generate up to IDR 21 trillion (USD $1.6 billion) worth of oil and gas.
The Cilamaya Seaport was designed to reduce logistics costs in Southeast Asia’s largest economy and to ease traffic at Jakarta’s Tanjung Priok port (which handles about two-thirds of the country's international trade). In Indonesia, about 20 percent of companies’ production costs are absorbed by logistics costs due to complicated transportation caused by the lack of quality and quantity of adequate infrastructure.
Location of Cilamaya Port:
Indonesia’s Ministry of National Development Planning (BAPPENAS) will conduct a new study - in cooperation with consultants and several other ministries - to determine the new location for the seaport. Previously, Indonesian Transportation Minister Ignasius Jonan stated that foreign investors would account for about 49 percent of the required funds to establish the project.
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