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Jakarta Post
The Jakarta Post
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Pertamina names five candidates to build Tuban refinery

  • Raras Cahyafitri

    The Jakarta Post

Jakarta | Fri, February 26, 2016 | 09:14 am

State-owned oil and gas firm Pertamina now has a shortlist of five candidates for the development of a new oil refinery in Tuban, East Java, one of several fuel processing plants to be built in the country.

The five candidates are Russia'€™s Rosnef, Saudi Arabia'€™s Aramco, Kuwait'€™s Petroleum International, China'€™s Sinopec and a consortium consisting of Thailand'€™s PTT Global Chemical Public Company and Thai Oil, according to Pertamina director for refining Rachmad Hardadi.

'€œThe selection process remains in progress. We are expecting to announce the results as early as next week,'€ Rachmad said Thursday.

Before shortlisting the candidates, Pertamina also invited Iranian and Indian firms to bid for the Tuban project. However, the Iranian company has yet to respond while the Indian firm only wanted to invest a minimal stake, Rachmad said.

The Tuban refinery is expected to have a production capacity of 300,000 barrels per day.

As part of an attempt to secure energy supplies, the country is seeking investors to cooperate in the development of more oil refineries. In past years, plans to establish the refineries fell through, particularly because the economics of the projects were too weak for investors. The government had also declined to give incentives that were requested by investors.

Besides for the Tuban project, the government is also seeking investors for refineries in Bontang in Kalimantan and in Arun in Aceh, the Energy and Mineral Resources Ministry'€™s oil and gas director general IGN Wiratmaja Puja has said. The Bontang and Arun refineries will be developed under the government and business entity cooperation scheme (KPBU).

Earlier this week, the ministry held meeting with Iranian representatives to follow up on a planned cooperation agreement in the oil and gas sector, which would include supplying crude oil and the development of refineries.

However, the crude supply seems to be a priority.

Pertamina spokesperson Wianda Pusponegoro said the company was in discussions with the National Iranian Oil Company for opportunities to supply crude oil, condensate and liquefied petroleum gas (LPG).

'€œWe are currently discussing various aspects, including legal and financial, to reach key terms for any agreement. The National Iranian Oil Company is very interested to supply crude and LPG. However, we are still assessing the opportunities, including which refineries will absorb the supply,'€ Wianda said.

Pertamina currently operates six big oil refineries in the country. Among the six facilities, the Balongan refinery and Cilacap refinery are seen as the most prepared because of their capacities. However, Pertamina already has long term contracts in place for the two refineries.

'€œWe have to respect the existing contracts, which still have years before expiry,'€ Wianda said, admitting that most volume needed for the refinery is supplied by Saudi Arabia as light crude.

'€œHowever, a variety of supply is also in the key performance index of our ISC,'€ she added.

Wianda was referring to Pertamina'€™s Integrated Supply Chain unit, which is responsible for the procurement of crude oil and petroleum products.