Page 10 - Downstream Monitor - MEA Week 43

DMEA RefininG DMEA
Aramco further extends Cilacap refinery talks
miDDle east
INDONeSIA’S new Minister for State-Owned enterprises has said Pertamina’s talks have been extended with Saudi Aramco regarding the upgrade of the former’s Cilacap refinery. The deadline has now been pushed back until December.
Appointed last week, erick Thohir said that the government was keen to continue with Aramco as its partner, but added that it would consider other partners if a deal could not be reached.
Aramco is provisionally committed to invest- ing in the estimated $5.7bn upgrade and expan- sion of the facility in Central Java, but the scheme is suffering delays over the partners’ differing enterprise valuations and other issues.
The pair formed a joint venture (JV) in 2016 to own, operate, expand and upgrade the facility to process 400,000 barrels per day (bpd) of crude into high-value fuels and basic petrochemicals.
The discussions had already been extended several times since December 2018.
In June, a statement from Pertamina’s Fajri- yah Usman said that the partners had agreed to hire financial advisors to help bring a resolu- tion to the disagreement over valuation, noting that talks would be extended by three months. Thohir’s statement this week noted that a valua- tion had still not been settled.
earlier in the year, the Indonesian firm had said that if talks with Aramco were to break down, Pertamina would proceed alone, targeting an operational date of 2025.
Cilacap forms part of the country’s slow-mov- ing Refining Development Masterplan (RDMP), launched in 2014, covering two greenfield pro- jects alongside five brownfield schemes.
The overarching aim of the RDMP is raise total capacity from around 1.2 million bpd at
present to 2.3 million bpd by 2025, thereby elim- inating costly oil product imports, while improv- ing the quality of locally produced fuel.
Downstream ties with Pertamina were fur- ther strengthened in mid-2018 in the form of the first term contract for the supply of gasoline by Saudi Aramco Products Trading Co., covering sales of 1-2 million barrels per month from July to December.
Aramco is not the only Middle eastern party involved in the RDMP.
Pertamina has been in talks with Omani companies since at least 2016 to invest in a grass- roots refinery at Bontang in east Kalimantan, in the east of Borneo Island, signing a framework agreement with Oman’s Overseas Oil & Gas (OOG) in December 2018.
In April, OOG announced it was seeking partners to co-invest in the 300,000 bpd, mul- ti-billion dollar greenfield facility.
Pertamina said in January last year that OOG and Japan’s Cosmo Oil International had been selected from among eight bidders to partner the company on the project, but the Japanese firm was subsequently reported to have withdrawn.
OOG and Pertamina have committed to undertaking a bankable feasibility study, after which the FeeD phase was envisaged conclud- ing in mid-2020, with completion scheduled for 2025/2026.
On April 15, OOG chairman Khalfan al-Ri- yami told reporters that discussions were again underway with Cosmo while other investors were also being sought in light of the scale of the investment required.
Project costs were put at $15bn, 50% higher than in previous statements, and the company was said to be aiming to secure finance within five months.™
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w w w . N E W S B A S E . c o m Week 43 31•October•2019