“Sweet crude oil is more expensive compared to sour [crude oil]. That’s why we want to upgrade our existing refineries so that they can process sour crude,” Pertamina refinery director Toharso said recently.

This will pave the way for the company to import cheaper crude oil in the future, especially from Middle Eastern countries.

Pertamina’s refineries, specifically those built between 1936 and 1990, are designed to refine sweet crude oil, which has a low sulfur content of around 0.2 percent.

However, in today’s market, sour crude oil with its higher sulfur content of around 2 percent is relatively easier to find at cheaper prices.

Toharso said Pertamina would first upgrade the Balongan refinery in West Java in May or June 2018, before upgrading the Cilacap refinery in East Java and the Balikpapan refinery in East Kalimantan.

“We have been importing sweet crude oil from the African market, which requires around 26 days to ship. Meanwhile, after the upgrades, we can import sour crude oil from Saudi Arabia, Iraq or Iran, which have shorter [shipping] distances and are less costly,” said Toto Nugroho, Pertamina senior vice president for integrated supply chain.

Pertamina estimates it will have to import around 350,000 barrels of crude per day in 2018, of which 100,000 barrels are Arabian light crude (ALC). (bbn)

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