Iran, China and Indonesia have launched a joint venture (JV) to build a refinery on East Java island to process 150,000 barrels per day (bpd) of heavy crude oil, a report said.

According to the agreement reached between the three countries, Iran will supply feedstock and partially finance the project, while China provides 85 per cent of the funds, head of the Iranian Oil Exporters Union Hassan Khosrojerdi was quoted in the Iran Daily report.

"Negotiations are underway with Iranian Oil Minister Bijan Namdar Zanganeh for providing heavy crude feedstock under a long-term contract," Khosrojerdi said.

Further plans include private sectors from the three countries building five refineries for processing gas condensates in Indonesia, according to Khosrojerdi.

The six projects, including the oil refinery, are estimated to cost $3.5 billion, he added.

Indonesia is building four refineries, each with capacities ranging between 300,000 bpd and 350,000 bpd, to cut its dependency on oil product imports.

Once all the four refineries become operational, the total refining capacity will rise to 1.68 million barrels per day by 2022 from the current level of about 800,000 bpd.

"With the construction of refineries abroad, Iran can count on permanent and stable customers for a couple of decades and guarantee demand and supply on long term," Deputy Oil Minister Abbas Kazemi was quoted as saying in the report.

Iran has also signed an agreement with Brazil to construct a refinery to process 300,000 bpd of crude oil.

Negotiations have also taken place on the construction of a refinery in India to process 400,000 bpd of crude, Kazemi said.