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Jakarta Post

Pertamina, Saudi Aramco kick off Cilacap refinery upgrade

  • Anton Hermansyah
    Anton Hermansyah

    The Jakarta Post

Jakarta   /   Mon, May 23, 2016   /  03:59 pm
Pertamina, Saudi Aramco kick off Cilacap refinery upgrade Energy and Mineral Resources Minister Sudirman Said (left), State-Owned Enterprises Minister Rini Soemarno (second left), Pertamina president director Dwi Soetjipto (third left), Pertamina processing director Rachmad Hardadi (center), Saudi Aramco international operations executive director Said al-Hadrami (third right), and Saudi Arabian Ambassador to Indonesia Mustafa Ibrahim Mubarak (second right) pose during a memorandum of understanding (MoU) signing between Pertamina and Saudi Aramco on Monday. (thejakartapost.com/Anton Hermansyah)

State-owned oil company Pertamina has signed a memorandum of understanding (MoU) with Saudi Aramco to upgrade the capacity of the Cilacap refinery. The project is expected to be completed within six years.

Amec Foster Wheeler Energy Ltd will carry out a detailed engineering design, which is expected to take nine months. The construction will then begin in October 2018 and the refinery would be operational in 2022, said Pertamina president director Dwi Soetjipto.

"It is part of Pertamina’s Refinery Development Master Plan, and it costs US$5 billion. The capacity will be increased from 340,000 to 370,000 barrels per day [bpd]. Gasoline and diesel production will be maximized, all for domestic consumption," he said on Monday in Jakarta.

The 9 percent increase in capacity would be followed by doubled efficiency, Dwi added. The production capacity of its petrochemical unit would also increase from 300,000 to 600,000 tons per year.

"The increasing petrochemical capacity is Pertamina's commitment to downstreaming. We will be more serious in the petrochemicals business in the future," he said.

The joint agreement led to a share transfer in the Cilacap refinery, making Aramco a new shareholder. Shares in the Cilacap refinery are divided at a ratio of 55 to 45 between Pertamina and Saudi Aramco, said Pertamina processing director Rachmad Hardadi.

Saudi Aramco international operations executive director Said al-Hadrami said the company had committed to supplying up to 70 percent of crude oil needed by the refinery, around 260,000 to 270,000 bpd.

However, the refinery is free to look for supplies from other sources as the Saudi-owned company is flexible with supply issues. Currently, Aramco only supplies the Cilacap refinery with 120,000 to 125,000 bpd of the total 340,000 bpd needed.

"When you have a joint venture, you would like to supply 100 percent or maybe 150 percent of the need. But at the end of the day it is the commercial decision that matters. [..] We don't give 100 percent supply because it is not the best thing to do," he said. (ags)

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