Indonesia Pertamina, Saudi Aramco set up JV for Cilacap Refinery development

Photo by Vincencia NLS

Indonesia State energy company PT Pertamina and global oil & gas producer Saudi Aramco have set up a joint venture company to develop $5 billion Cilacap Refinery Project as part of Indonesia’s refinery development masterplan program (RMDP).

Pertamina will have 70 per cent stake in the project while Saudi Aramco will own 30 percent stake.

The signing ceremony of Engineering & Project Management Services Contract for RDMP Cilacap Upgrade Project was held on Monday. The executive director international operations of Saudi Aramco Said A Al-Hadrami and Rachmad Hardadi, Refining Director of Pertamina signed the agreement, which was witnessed by State Own Enterprises Minister Rini Soemarno and Minister for Energy and Resources Mineral Sudirman Said.

Also Read: Indonesia’s Pertamina, Saudi Aramco to invest $5.5b for upgrading Refinery Unit IV Cilacap

Al-Hadrami said the signing agreement will pave way for a long-term partnership with Pertamina.

“Together with Pertamina, we will be able to deliver oil and petrochemical products to the country. We have a long-term view and the agreement has a mutual benefits for both parties,” he stated.

According to him, Saudi Aramco will first focus on this project and then look at other joint projects. Previously Saudi Aramco and Pertamina has agreed to develop three refinery projects in Cilacap, Balongan in East Java and Dumai in South Sumatera with total investment around $15 billion.

Meanwhile, Director for Processing of Pertamina Rachmad Herdadi said the engineering design is expected to be completed in 8-9 months that will raise the production capacity of Cilacap refinery to 370,000 barrels of oil per day (bpd) in 2022 from currently 330,000 bpd.

The refinery will also increase capacity to produce derivative products, with enhanced capacity at  600,000 tons of petrochemical products (double from 300,000 tons per annum produced at present).

The construction is scheduled to start in October 2018. The fuel output from the refinery will meet the Euro 4 and Euro 5 standards.

Pertamina CEO Dwi Soetjipto added the signing of engineering service is a follow up of the heads of agreement (HoA) signed by both parties in 2015. The project is estimated to require investment of $5 billion.

Pertamina is also in the process to upgrade Balongan and Dumai refineries which require combined investment of around $15 billion. The projects will not only increase the capacity of those oil refineries but also make the production process much more efficient.

Also Read: Indonesia Pertamina, Russia Rosneft team up for $12b refinery

The expansion of refineries, set out in the RDMP, comprises of three parts – expansion on the primary unit facility through revamping of capacity of the crude distillate units (CDU) and optimizing the capacity.

Upgrading the secondary unit through revamping of Residual Fluid Catalytic Cracking (RFCC) which will jack up its production capacity to 81,000 bpd from 62,000 bpd at present. And installation of new hydro cracker unit with capacity of 43,000 bpd.

The company will also upgrade the petrochemical unit by boosting the production of paraxylene from 280,000 barrels per day to 485,000 bpd. It will also construct a new polypropylene plant in order to increase the polypropylene output to 153,000 tons per annum.

If the front-end engineering design (FEED) can be completed in 2017, and the EPC begins in 2018, the Cilacap refinery upgrading mega project could be completed and be operational by the end of 2022.

Pertamina plans to invest around $4.42 billion this year and 75 per cent of the total investment will be distributed for upstream business. Soetjipto said the company plans to double its fuel products output to 1.6 million bpd by 2019 to meet the market demand and cut imports.

At present, Pertamina only processed around 1.1 million barrels of oil at its refineries to meet domestic fuel consumption of 1.5 million bpd. The remaining fuels are imported from Singapore and other countries.

Also Read: Indonesia’s Pertamina takes majority in offshore gas block from French Total E&P, Japan’s Inpex