Indonesia's Pertamina to revisit refinery expansion plans amid green energy shift

Indonesia's Pertamina to revisit refinery expansion plans amid green energy shift

PHILE PHOTO: A view of state-owned oil giant Pertamina's refinery unit IV in Cilacap, Central Java, Indonesia January 13, 2016. REUTERS/Darren Whiteside/File Photo

The refinery arm of the Indonesian state energy firm Pertamina is redesigning its refinery expansion plans to meet shifting demands from a transition towards renewable energy, its chief executive said on Tuesday.

Under Pertamina’s 2015 refinery development plan, the company aims to upgrade four of its biggest refineries and build two new ones, which would nearly double its processing capacity to more than 1.5 million barrels per day.

PT Kilang Pertamina Internasional, or KPI, Pertamina’s refinery subholding, is readjusting the scope, product mix and timeline of its investment for Plaju, Dumai and Cilacap refineries, its chief executive Taufik Adityawarman told Reuters in an interview.

“Previously, we had a long list to increase capacity and we were emphasising volume,” he said of the 2015 plan.

“Now, with a new business environment, adoption of electric vehicles and our own commitment to energy transition, we have to be adaptive.”

Indonesia last year pledged a more ambitious carbon emission cut of 31.89% on its own, or 43.2% with international support by 2030. It is also targeting net-zero emissions by 2060.

According to a 2021 presentation by Pertamina, upgrades of Dumai, Plaju and Cilacap would require a combined $6.2 billion, with expected completion in 2027.

The new investment plan might result in bigger production of fuel made of renewable sources, such as diesel fuel and jet fuel made from vegetable oil, Taufik added.

The Cilacap plant already has 3,000 bpd capacity to produce fuel made from palm oil — of which Indonesia is the world’s biggest producer — and is expected to double that capacity by 2026.

Taufik said KPI aims to finalise their new investment plan in the first half of this year.

Pertamina completed the first phase of its Balongan refinery upgrade in 2022, expanding its capacity to 150,000 bpd from 125,000 bpd.

It is aiming to finish the first phase of its Balikpapan refinery upgrade in 2024 to raise processing capacity to 360,000 bpd from 260,000 bpd. KPI would spend $1.5 billion in capital expenditure this year, mostly for the Balikpapan refinery.

Taufik said KPI hopes to reach a final investment decision on the Tuban refinery in the second half of the year.

Reuters

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