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Pertamina to relocate Bontang refinery project
PROJECTS & COMPANIES
INDONESIA’S state-run Pertamina has decided to relocate its $10-15bn refinery project from Bontang City in East Kalimantan Province fol- lowing the end of its partnership with Oman’s Overseas Oil and Gas (OOG).
Pertamina ended its joint venture with OOG, following Indonesian Co-ordinating Minister for Maritime and Investment Affairs Luhut Bin- sar Pandjaitan’s comments that the Middle East- ern company was not serious enough and that a new partner should be approached.
The Indonesian major is now considering locations on Sumatra, including the port of Kuala Tanjung and the Arun liquefied natural gas (LNG) complex, Reuters quoted Pertamina director Heru Setiawan as saying on March 1.
The executive said locating the project on the island would allow his company Pertamina to access both international and local markets.
Prior to Pertamina’s exit, OOG had con- trolled 90% of the project and had estimated it would cost $15bn, up from the Indonesian company’s original $10bn price tag. OOG had been looking for other partners to help develop the refinery, with OOG chairman Khalfan Al Riyami saying in April 2019 that he wanted to have resolved financing within five months. The project was slated to start up in 2025-2026.
OOG had signed memoranda of understand- ing (MoUs) worth $3bn with locally owned Sanur- hasta Mitra and Meta Epsi for the construction of associated infrastructure, including a power plant, pipelines and water treatment facilities.
Commenting on OOG’s exit, Pertamina’s president director Nicke Widyawati said at the time that the United Arab Emirates’ (UAE) Mubadala Petroleum or Abu Dhabi National Oil Co. (ADNOC) might participate in the project.
The Bontang project was part of the country’s Refinery Development Master Plan (RDMP),
which aims to double national refining capac- ity from 1mn barrels per day to 2mn bpd. Per- tamina said on February 28 that the goal of the development programme was to help it end fuel imports by 2026.
Pertamina’s vice-president of corporate com- munications, Fajriyah Usman, said the company had completed more than 13% of the Balikpapan refinery development and was aiming to have 40% of the project finished by the end of the year.
Usman said around 40 companies had asked to partner with Pertamina on the Balikpapan refinery, which was similar “the Balongan refin- ery and other refineries”.
She said negotiations with potential part- ners and investors were proceeding well and that several MoUs had been signed with various companies, including ADNOC, Mubadala, Rus- sia’s Rosneft and Korea Trade Insurance Corp. (K-Sure).
Usman added: “Negotiations with Saudi Ara- mco also continue and the solution is to imple- ment a scheme like the Balikpapan refinery by way of a toll fee for the old refinery, but still part- nered for a new refinery in Cilacap.”
Pertamina and Saudi Aramco are in talks over the Cilacap’s refinery planned expansion, with the Indonesian company saying in Decem- ber 2019 that it hoped to wrap up negotiations in the first quarter of this 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 has suffered delays over the partners’ differing enterprise valuations and other issues.
The pair formed a venture in 2016 to own, operate, expand and upgrade the facility to pro- cess 400,000 bpd of crude into high-value fuels and basic petrochemicals. It currently processes 348,000 bpd.™
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w w w . N E W S B A S E . c o m Week 09 04•March•2020