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RI, Angola to partner in oil refinery
State-owned oil and gas giant PT Pertamina and Angola firm Sonangol EP sealed an agreement on Friday that would pave the way for cooperation and the possibility of building refineries in Indonesia
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tate-owned oil and gas giant PT Pertamina and Angola firm Sonangol EP sealed an agreement on Friday that would pave the way for cooperation and the possibility of building refineries in Indonesia.
Under the framework of the agreement, the two companies will cooperate in the upstream sector of the oil and gas business, development of petroleum refinery and petrochemical refinery as well as cooperation in the import and export of refined products, crude oil and natural gas.
The agreement was signed by Pertamina acting president director Muhamad Husen and Sonangol board of directors chairman Francisco de Lemos Jose Maria. Also witnessing the signing were Vice President Jusuf Kalla and Angolan Vice President Manuel Domingos Vicente.
Kalla said the cooperation was expected to help Indonesia narrow the gap of supply and demand in fuel, whose demand reached 1.6 million barrel per day while production was only around 800,000 barrels per day.
'We have to secure enough supply from several countries, including Angola. We don't want to rely only on one country because we will be in trouble if something happens with that country,' Kalla said after the signing ceremony.
To follow up on the agreement and to realize the planned cooperation, the two companies will form a task force within a week to lay out the foundation of a joint venture that will prepare the details of those projects.
'We hope that this is a long-term cooperation so that we can reduce our dependency to spot market,' Energy and Mineral Resources Minister Sudirman Said said.
He added that the country would save up to US$2.5 million per day if it got direct supply of 100,000 barrel per day from Angola.
Indonesia, a former member of the Organization of Petroleum Exporting Countries (OPEC), has seen an increasing demand for fuel to support its economic growth. Fuel demand in the country has grown around 8 percent each year.
- Pertamina and Sonangol agree to build cooperation
- Firms to cooperate in the import and export of refined products, crude oil and natural gas
- RI hopes to narrow the gap of supply and demand in fuel
However, the country's oil production has been on the decline as oil fields have been depleted due to past exploitation. Consequently, the country has to import a huge volume of oil and its products, resulting in pressure being put on its current-account balance.
Oil production is expected to stand at 818,000 barrel per day by year-end.
The country does not have the capacity to process more crude oil to meet demand as current refineries are too old. There are currently six refineries in Indonesia operated by Pertamina. The facilities are located in Cilacap in Central Java, Balongan in West Java, Balikpapan in East Kalimantan, Dumai in Riau, Kasim in West Papua and Plaju in South Sumatra.
The country has not built any new refineries since 1994, when president Soeharto inaugurated the Balongan refinery.
'Pertamina is ready to realize the cooperation [with Angola], which will be a milestone for the company in the development of its main business in the oil and gas sector. We will together explore various potentials of upstream oil and gas in Angola, Indonesia and other countries as well as potentials for refinery development, which is necessary for Indonesia,' Husen said.
Husen added that he expected the country to be self-sufficient in the energy sector within the next five or six years should current attempts to boost capacity be successful.
Pertamina previously planned to partner with Kuwait Petroleum and Saudi Aramco to build refineries in the country. However, the plan faces hurdles, particularly due to incentive issues.
