State-run oil and gas firm PT Pertamina announced over the weekend that it would start the process of constructing a US$450 million centralized crude terminal (CCT) in Lawe-Lawe, East Kalimantan.
The terminal will have a total storage capacity of 25 million barrels of oil or equal to a 25-day supply for the country’s refineries. In addition, to improve the country’s energy security, the terminal is also projected to be a crude hub for the Southeast Asia region.
“We’re going to start the tender process for the terminal. The Lawe-Lawe CCT will provide a crude blending facility, including domestic crude with high contaminant, so that it will allow Pertamina to buy various types of crude oils at competitive prices,” company spokesperson Mochamad Harun said in a press statement.
“By maximizing the absorption of domestic crude, we can reduce imports, which will allow us to cut high shipping costs,” he added.
The construction of the terminal, which has been studied since last year, aimed to anticipate several factors, such as the country’s declining oil production, refineries which could only process limited types of crude and skyrocketing global oil prices, Harun explained.
“The tender for the engineering, procurement and construction [EPC] projects will be started this year and is scheduled to be completed in 2014. The terminal is designed to have 25 storage tanks,” he said.
Pertamina has completed the environmental impact analysis (Amdal) at a total area of 750 hectares. The regional administration has also expressed its support for the project by accelerating the issuance of required permits to execute it, the firm claims.
The company also affirms its commitment to buy all crude oil produced by production sharing contract (PSC) holders in anticipation of possible increases in global oil prices should Iran follow through on its threat to close the Hormuz strait in response to the EU oil embargo.
For that purpose, Pertamina has requested the government to improve current regulations to provide the option for the company to buy oil from domestic producers. In addition to sending a letter to upstream oil and gas regulator BPMigas, the firm has also sent the same letter to all PSC holders in the country expressing its interest to buy their oil.
“Pertamina is willing to offer good prices for crude,” Harun emphasized.