Page 9 - Downstream Monitor - MEA Week 24

DMEA refininG DMEA
Pertamina and Aramco agree to extend Cilacap negotiations
middle east
INDONESIAN NOC Pertamina announced this week that it would be prolonging negotia- tions with Saudi Aramco over their planned joint development of a re nery in Central Java.
Aramco is provisionally committed to invest- ing in the estimated US$5.7 billion upgrade and expansion of the Cilacap re nery, but the scheme is su ering delays over the partners’ di ering enterprise valuations and other issues.
e 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.
In a statement Pertamina’s Fajriyah Usman said that the partners had agreed to hire nancial advisors to help bring a resolution to the disa- greement over valuation, noting that talks would be extended by three months.
Earlier in the year, the Indonesian rm 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 Re ning Development Masterplan (RDMP), launched in 2014, covering two green eld pro- jects alongside ve brown eld schemes.
e overarching aim of the RDMP is to 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
rst 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 grassroots re nery 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 green eld 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from among eight bidders to partner the company on the project, but the Japanese rm was subsequently reported to have withdrawn.
OOG and Pertamina have committed to undertaking a bankable feasibility study, a er 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 under way with Cosmo while other investors were also being sought in light of the scale of the investment required.
Project costs were put at US$15 billion, 50% higher than in previous statements, and the company was said to be aiming to secure nance within ve months.™
Indonesian re neries Source: Pertamina
Week 24 19•June•2019 w w w . N E W S B A S E . c o m
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