The government-funded refinery, which is expected to produce around 300,000 barrels per day, will be operated by Pertamina.
The new refinery, which is expected to come online by 2021, is likely to be situated in East Java or Sumatra, reports Reuters.
Oil and gas storage and business development division deputy director at Indonesia’s energy and mineral resources ministry Yusef Kartiwa Caryana said the country is conducting a feasibility study on the new refinery and is expected to be completed in 2014.
The country is planning to source crude from Iraq, which currently has an oil supply agreement, according to Caryana.
Indonesia currently has around 1 million bpd of refining capacity that meets about two-thirds of its demand.
