The Jakarta Post cited Pertamina marketing director Ahmad Bambang as saying that the $9bn oil refinery is planned to be developed under a public-private partnership scheme.
Ahmad said: "The project value will depend on the investors, yet I think it will be $8 billion to $9 billion.
"Pertamina will be the off-taker of the products, but of course the price should be lower than import prices."
The refinery, which will have 300,000 barrels oil per day in capacity, will produce fuel products including gasoline with a registered octane number (RON) of 92 and Euro IV/V type diesel, reports the publication.
All the six refineries in Indonesia, located in Cilacap of Central Java, Balongan of West Java, Balikpapan of East Kalimantan, Dumai of Riau, Plaju of South Sumatra and Kasim of West Papua are being operated by Pertamina.
However, the refineries are currently running below capacity due to their age.
The company is considering to upgrade five of the six refineries to boost their total capacity to 1.68 million barrels per day, with an investment of approximately $25bn.
Once upgraded, the refineries will process more complex sour crude oil, better products of at least RON 92 gasoline and Euro IV type diesel fuel, the report noted.
