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Jakarta Post

Pertamina plans to upgrade oil refineries

  • Raras Cahyafitri

    The Jakarta Post

Jakarta   /   Fri, October 3, 2014   /  09:13 am

State-owned oil and gas giant PT Pertamina is planning to improve the capacity of its refineries as part of an attempt to lower oil product imports, which have burdened the state budget.

Pertamina'€™s acting president director, M. Husen, said the upgrade was expected to add processing capacity of 500,000 barrels of oil per day (bopd) so the total capacity of Pertamina'€™s refineries would be 1.5 million bopd.

'€œWe will improve all of our refineries, particularly refineries in Cilacap [Central Java], Balongan [West Java] and Balikpapan [East Kalimantan]. Improving the refineries will be easier and cheaper for us. It will help reduce imports,'€ Husen said.

He added the company was now detailing the plan, including calculating the investment needed, as Pertamina was currently quite aggressive in expanding its portfolio through acquisition and overseas expansion.

There are currently six refineries in Indonesia operated by Pertamina. Besides the three mentioned earlier, other facilities are located in Dumai in Riau, Kasim in West Papua and Plaju in South Sumatra.

All of these refineries are old. The country has not built any new refineries since 1994, when president Soeharto inaugurated the Balongan refinery.

Critics have repeatedly said the country should build new refineries so it will have more capacity to process crude oil and reduce imports.

Pertamina previously planned to partner with Kuwait Petroleum and Saudi Aramco to build refineries in the country. However, the plan faces hurdles as the government has refused to give incentives for the projects.

Husen said the cooperation with Kuwait Petroleum and Saudi Aramco remained ongoing. However, he said, realization of the plan would take time.

In a recent development, the government has secured commitment from Iraq, which is one of the world'€™s biggest oil producers, to provide investment funds and crude oil for the country'€™s refinery projects. The supply of crude oil will be 300,000 bopd for 20 years for a new oil refinery to be built in Bontang in East Kalimantan.

Indonesia, a former member of the Organization of the Petroleum Exporting Countries, has been
struggling to meet growing demand for oil and oil products to fuel its economy. Expecting supply
from domestic production is pointless as the country'€™s oil fields are old and depleting due to past exploitation.

Oil production is currently at around 790,000 bopd, still far from the full year target of 818,000 bopd, according to the upstream oil and gas regulatory task force SKK Migas'€™ spokesperson Rudianto Rimbono.

Pertamina vice president for marketing Muhammad Iskandar has said that the country'€™s Premium gasoline imports currently reached 65 percent of the total demand of 46 million kiloliters.

Meanwhile, diesel fuel imports reached 35 percent of the total demand of around 27 million kiloliters, including subsidized and non-subsidized fuel.