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Refinery upgrades to cut $1 billion of imports

Upgrades on the Cilacap refinery and the resumption of the Trans Pacific Petrochemical Indotama (TPPI) refinery have saved a billion US dollars in foreign exchange spending on oil imports, which should ease pressure on the current account as well as on the rupiah

Raras Cahyafitri (The Jakarta Post)
Cilacap, Central Java
Fri, November 27, 2015

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Refinery upgrades to cut $1 billion of imports

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pgrades on the Cilacap refinery and the resumption of the Trans Pacific Petrochemical Indotama (TPPI) refinery have saved a billion US dollars in foreign exchange spending on oil imports, which should ease pressure on the current account as well as on the rupiah.

On Thursday, Pertamina officially inaugurated the operation of the Residual Fluid Catalytic Cracking (RFCC) unit at its Cilacap refinery, a development project that brings added-value products for the country. Following the start of its operation in late September, the RFCC is now running at full capacity.

'€œFor years, we have seen stagnant productivity. Following the operation of the project as well as the TPPI, we will be able to reduce our imports, meaning less foreign exchange must be spent. This will contribute to the development of the national economy,'€ said Vice President Jusuf Kalla, who attended the inauguration ceremony.

At its full operation, the RFCC currently produces around 37,000 barrels per day of high octane mogas component (HOMC), 1,066 tons per day of liquefied petroleum gas (LPG) and 430 tons per day of propylene.

The HOMC will then be processed further into Premium gasoline, which will increase Premium production by the Cilacap refinery from 61,000 to 91,000 barrels per day, according to Pertamina.

Meanwhile, the TPPI refinery, which is located in Tuban, East Java, is currently running at around 70 percent of capacity. At full operation, the TPPI refinery is expected to be able to cut Premium gasoline imports by 29 percent.

Pertamina president director Dwi Soetjipto said each of the firms has helped the company save on the use of its foreign exchange reserves following the reduction in the imports of petroleum products. He said that the full operation of the RFCC, the development of which was started in 2011, contributed to US$3.6 million per day in savings while the TPPI saved $6.4 million per day.

'€œFollowing the RFCC'€™s full operation, the imports of Premium can be reduced by 30 to 35 percent and imports of diesel fuel by 30 percent. With this, we will no longer need to import diesel fuel in 2016,'€ Dwi said.

Apart from the reduction in spending on imports, Pertamina is also expecting additional savings in the near future upon the completion of the Cilacap Blue Sky Project and the upgrading of the Cilacap refinery. The Blue Sky Project is the RFCC'€™s and it is aimed at increasing gasoline specifications to RON 92 product from the current RON 88.

On Thursday, Pertamina announced that it had appointed the JGC Corporation to do the engineering, procurement and construction of the project in a contract worth $392 million. The Cilacap Blue Sky Project is expected to be completed by the end of 2018, according to Dwi.

Pertamina is estimating that it will be able to save around $1.5 million per day in foreign exchange following the completion of the project.

In another significant move, Pertamina sealed an agreement with Saudi Arabian firm Saudi Aramco to cooperate on the upgrade of the Cilacap refinery, which is part of a bigger plan called the Refinery Development Master Plan. Under the cooperation agreement, Pertamina and Saudi Aramco will team up to improve the capacity of the CIlacap refinery with an estimated investment totaling $5.5 billion.
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