Indonesia prepares to sign an $8-billion contract with U.S. engineering company KBR Inc to help it build 17 modular refineries, as part of the U.S.-Indonesia trade deal, Reuters reported on Tuesday, citing sources with knowledge of the plans and a government presentation it has seen.
Last week, Indonesia and the United States reached a trade deal, under which the U.S. tariffs on Indonesian products will be lowered to 19% from an initial levy of 32%.
Indonesia was slapped with one of the highest tariffs – 32% – in the “liberation day” tariffs announced by U.S. President Donald Trump in early April. These tariffs were suspended for 90 days, during which the Trump Administration expected most countries to come pleading their cases and promising to boost their imports of U.S. goods to avoid high tariffs.
Following weeks of negotiations, Indonesia’s products will now face a lower – 19% — tariff on entering the United States.
Days before the deal was announced, Indonesia’s Energy Minister Bahlil Lahadalia said his country would buy billions of U.S. dollars worth of American oil and oil products if the U.S. tariffs on Indonesian goods are lowered.
Indonesia, Southeast Asia’s biggest economy, has signaled it would offer to buy an additional $10 billion worth of American oil and liquefied petroleum gas (LPG).
Indonesia also plans to slash its fuel imports from Singapore and source more refined products from the United States as the country looks to negotiate lower tariffs with the U.S.
Argus reported in May that state energy firm Pertamina is considering importing oil products from the United States.
Now Indonesia’s sovereign wealth fund Daya Anagata Nusantara Investment Management Board (Danantara) is preparing to sign an $8-billion deal with KBR for the construction of modular refineries, according to Reuters’ sources.
As part of the trade deal with the U.S., Indonesia will also buy 50 Boeing aircraft and ease its local content requirements for U.S. investors including Apple and General Electric.
By Michael Kern for Oilprice.com
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