Pertamina president director Nicke Widyawati said there were five options that the state company and Aramco would choose from.

“We have picked five [financial advisor candidates] and right now are in the process of deciding. Hopefully next week we will have the answer,” Nicke told a press briefing on Friday. The financial advisor would work for six weeks to calculate the corporate value (EV).

Nicke was confident that after the financial advisor had finished its valuation of the Cilacap refinery, a decision on the spin-off deal would take place soon.

“We [Pertamina and Aramco] will decide [on the spin-off deal] no later than September. It will be faster as both companies have agreed on the financial advisor,” she said during a visit to the Cilacap refinery.

When asked what would happen in September if the spin-off deal failed, Nicke said the company would continue with the plan of offering Aramco to finance the refinery’s petrochemical project.

“If the spin-off scheme doesn't work, we will offer them to invest in new projects [within the refinery], which is the petrochemical plant that will exclude the valuation issue,” she said.

In a nutshell, Aramco needs the enterprise value of the Cilacap refinery as it serves as a crucial consideration for the company to decide whether or not to take the spin-off deal with Pertamina.

This is not the first valuation of the Cilacap refinery in this negotiation as in February, Pertamina stated that the EV of the refinery was US$5.66 billion, while Aramco’s figure was $2.8 billion.

In an official document of the Energy and Mineral Resources Ministry on Feb. 14 that was circulated among the press at that time, the difference in EV valuation between the two firms made Pertamina hire global consulting firm PricewaterhouseCoopers (PwC) to reevaluate the EV of the Cilacap refinery.

“[The Cilacap refinery project] needs a boost from the Saudi Prince [Mohammed bin Salman] to approve the EV that was proposed by Pertamina or the new valuation that will be submitted by PwC,” says one of the statements in the document.

Discussion between both firms on a spin-off deal in Pertamina’s development project in its Refinery Unit IV (RU IV) in Cilacap, Central Java has been going on for about four years, but the two parties are still having difficulty coming to an understanding on the EV of the refinery.

The heads of agreement (HoA) between the two firms was signed in November 2015, with Aramco pledging to invest $6 billion in the revitalization of the refinery facilities.

After the revitalization, the production capacity is expected to increase to 400,000 barrels per day with a fuel product that meets Euro V requirements.

Deputy Energy and Mineral Resources Minister Arcandra Tahar said the government would continue supporting the discussion between Pertamina and Aramco.

“We will also check the [Cilacap] refinery directly, to make an assessment on whether the estimated EV [at around $6 billion] is reasonable or not,” he said Friday.

The valuation of $6 billion also includes the newly finished $392 million Proyek Langit Biru Cilacap (PLBC), which increased the unit’s capability to produce cleaner fuel.

Pertamina refinery and petrochemical megaproject director Ignatius Tallulembang said Friday that the project was fully completed and had been in operation since June.

“We started the project’s construction in November 2015 and completed it in June. Right now, it is running at 100 percent capacity,” he said on Friday during a visit to the refinery.

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