The Jakarta Post
State-owned energy giant Pertamina has said it has convinced Saudi Arabian oil giant Saudi Aramco and Russia's Rosneft to conduct joint marketing efforts, which will ease its financial burden.
In December last year, Pertamina signed a joint-venture agreement with Saudi Aramco on upgrading the Cilacap refinery in East Java with a total investment of US$5.8 billion.
It is estimated that the upgraded facility can produce 400,000 barrels of oil per day (bopd), up from the current production of 348,000 bopd, once it is complete in 2023.
Meanwhile, Pertamina will team up with Rosneft to develop the new $15 billion Tuban refinery, also in East Java, which is projected to produce 300,000 bopd once it comes online in 2024.Read also: Pertamina may get accounting perk to ease burdens
Pertamina, which owns 55 percent of both projects, was previously the sole off-taker of output by the Cilacap and Tuban refineries. This resulted in all debts from these projects being Pertamina's alone, resulting in an increase in its debt burden.
“So, we are renegotiating the Cilacap and Tuban projects, with negotiations reaching 95 percent completion. We’re currently just waiting for the legal process before going to the next phase,” Pertamina finance director Arief Budiman said Wednesday.
Pertamina said both Saudi Aramco and Rosneft had agreed to give financial support for the basic engineering design (BED) and front-end engineering design (FEED) of the two refinery projects.
The basic studies and FEED for the Tuban project alone will cost $270 million. (bbn)