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Pertamina bids on overseas refinery to boost supply
Spreading wings: Pertamina upstream director Syamsu Alam (left to right), Pertamina international exploration-production president director Slamet Riadhy and Indonesian deputy ambassador to Malaysia Hermono talk after inaugurating the new Pertamina Malaysia Exploration-Production office in Kuala Lumpur, Malaysia, on Monday
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span class="inline inline-center">Spreading wings: Pertamina upstream director Syamsu Alam (left to right), Pertamina international exploration-production president director Slamet Riadhy and Indonesian deputy ambassador to Malaysia Hermono talk after inaugurating the new Pertamina Malaysia Exploration-Production office in Kuala Lumpur, Malaysia, on Monday. The newly opened office is a part of Pertamina's expansion plan in the neighboring country. Antara/Fanny Octavianus
State-owned oil and gas firm Pertamina will acquire a major overseas oil refinery to ensure sufficient supply to meet growing demand for petroleum products in Indonesia, the company's executive has said.
Pertamina director for refining Rachmad Hardadi said the company was bidding on a 51 percent stake in a refinery located in a Southeast Asian country. He declined to reveal more details of the refinery's location.
'If we are successful in the bid, we will be able to strengthen the fuel supply to Indonesia. The refinery will process crude produced by Pertamina's fields overseas and send the petroleum products to Indonesia,' Rachmad said on Monday.
The refinery will start delivering the products to Indonesia starting early 2016.
Acquiring overseas oil refineries is currently Pertamina's short-term plan to meet growing demand for fuel in the country. Figures from Pertamina showed that the country needs 1.6 million barrel per day of crude oil to meet the energy demand in the country, which is already higher than the refining capacities.
Pertamina has six refineries with total processing capacity of 1 million bpd of crude oil. However, the refineries are old and can no longer run at their full capacity. They are currently only able to process around 850,000 bpd of crude oil into derivative products, forcing the country to import a significant amount of petroleum products such as gasoline and diesel fuel.
Figures from Pertamina showed that the refineries were now only able to produce 191,000 bpd of gasoline while demand had reached over 554,000 bpd. For diesel, the refineries supply around 321,000 bpd while demand touched 536,000 bpd.
According to Rachmad, Pertamina is also seeking refineries in other locations, such as in Australia. However, he said, a thorough assessment on the impact of the acquisition of the Southeast Asia refinery would be carried out before the company moved to other acquisitions of overseas refineries.
'Our short-term plan is a five-year strategy. Our main focus is on the mid-and long-term strategy of upgrading current refineries and development of new grass root refineries,' he added.
Pertamina is currently working to upgrade four of its six refineries, namely its Balongan, Cilacap, Dumai and Balongan refineries, to be able to process more complex crude oil and produce a higher quality of products. The upgrading is estimated to cost around US$18 billion.
In the first phase, Pertamina expects to finish upgrading its Balikpapan and Cilacap refineries in 2021. In the second phase of upgrades, works on Dumai and Balongan refineries are targeted to be completed by 2023.
Meanwhile, one of new refineries to be built by the government under a public-private-partnership plan will be located in Bontang, East Kalimantan.
The Energy and Mineral Resources Ministry's director general for oil and gas, IGN Wiratmaja Puja, said the government was currently working to determine incentives to ease the development of new refineries.
'We hope the incentives help the projects finish within four to five years,' he said.
Wiratmaja added that the government would allow Pertamina to seek partners for the new refineries, including by reassessing partners it had previously approached.
