Govt to build a refinery for Banyu Urip oil in Tuban in 2013

The Energy and Mineral Resources Ministry unveiled its plan to build an oil refinery in Tuban, East Java, with a total capacity of 300,000 barrels per day (bpd), to process oil production from the Cepu field in Central Java.

The ministry’s director general for oil and gas, Evita Herawati Legowo, said that currently state oil and gas firm PT Pertamina was seeking investors to fund the project. She hoped that the development of the planned refinery could be
started in 2013.

“It takes around three years to set up a refinery. We have had interested investors, but we haven’t decided which one will be the partner of Pertamina in constructing and operating the refinery,” she told reporters on Tuesday after the groundbreaking ceremony of production facilities for the Banyu Urip field in the Cepu block.

With the assumption that the refinery will be built in three years, it will begin commercial operations in 2016, two years after the Banyu Urip field starts producing at its full capacity of 165,000 bpd.

Mobil Cepu Limited, operator of the Cepu block, which is also a subsidiary of US-based ExxonMobil, reported that the construction of facilities would be completed within 36 months, or would be completed by July or August 2014.

Energy and Mineral Resources Minister Jero Wacik, however, requested the company complete the project earlier, to achieve the government’s target to produce 1 million bpd of oil in 2013.

“If we all [the ministry, upstream oil and gas regulator BPMigas, Mobil Cepu and regional administrations] work together, we can make it. It is indeed a tough job, but it is not impossible,” he told reporters during a press conference.

He continued saying that he would request the company submit quarterly reports to BPMigas so that he could identify whether the project faced any constraints, and direct coordination with related institutions in the event of any problems.

The discovery of oil and gas at the Cepu block was first made in 2001. The Banyu Urip field is estimated to have total reserves of 450 million barrels. The field currently produces around 20,000 bpd.

The production facilities in the field’s full development stage will include 49 wells, an onshore central processing facility and a 95-kilometer-long pipeline to channel the processed oil to a floating storage and off-loading (FSO) unit with a capacity of 1.7 million barrels of oil.

Within the block, Mobil Cepu holds a 45 percent share, PT Pertamina EP Cepu 45 percent and the remaining 10 percent is owned by PT Sarana Patra Hulu Cepu (Central Java provincial administration), PT Asri Dharma Sejahtera (Bojonegoro, East Java), PT Blora Patragas Hulu (Blora, Central Java) and PT Petrogras Jatim Utama Cendana (East Java provincial administration).

Jero affirms its commitment that when the field produced at its full capacity, its production would be allocated for domestic needs.

As of today, the country’s oil production only reaches 905,000 bpd, far below the target of 945,000 bpd this year. The Banyu Urip field’s production is the government’s ultimate hope to reach the target of producing 1 million bpd in 2013.