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Pertamina, Aramco to finalise Cilacap plans in Q1
PROJECTS & COMPANIES
INDONESIA’S state-owned Pertamina said this week that its talks with Saudi Aramco over their planned joint venture to expand the Cilacap refinery were likely to be wrapped up in the first quarter of next year.
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 facil- ity to process 400,000 barrels per day of crude into high-value fuels and basic petrochemicals. It currently processes 348,000 bpd.
Pertamina CEO Nicke Widyawati said the latest talks had centred on forming a JV that would focus only on a new facility at Cilacap, rather than the existing units. These would con- tinue to be operated by Pertamina, with process- ingfeespaidtotheJV.
Reuters quoted her as saying: “This is what we are discussing now and we have set a target that in the first quarter next year this [negotiation] must be concluded.”
Talks were prolonged in October until December, following several previous extensions since December 2018.
In June, a statement from Pertamina’s Fajri- yah Usman said the partners had agreed to hire financial advisors to help bring a resolution to the disagreement over valuation, noting that talks would be extended by three months. In October, Indonesian Minister for State-Owned Enterprises Erick Thohir noted that a valuation had still not been settled.
Earlier in the year, the Indonesian firm 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 1.2mn bpd at present to 2.3mn bpd by 2025, thereby eliminating costly oil product imports while improving 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, covering sales of 1-2mn 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 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 2018 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 50 19•December•2019