“Once all of them are operational, no more Euro 2. Everything we produce will be Euro 5. The Dumai refinery will be the last one,” said Pertamina megaprojects director Ignatius “Lete” Tallulembang at a conference held in Jakarta on Wednesday to update the press on the progress of Pertamina’s refinery projects.

He told reporters that once they were completed, the six refineries would not only increase the company’s production capacity for gasoline, diesel and jet fuel but also improve the quality of its Euro 5-standard output, which emits lower levels of pollutants than Euro 2.

The refineries are part of Pertamina’s Refinery Development Master Plan (RDMP) and Grass Root Refinery (GRR) program. The RDMP lays out a road map for the upgrade of four refineries located in Dumai in Riau, Balikpapan in East Kalimantan, Cilacap in Central Java and Balongan in West Java, while the GRR details the company’s plan to construct two new production facilities in Tuban, East Java, and Bontang, East Kalimantan.

The upgraded refineries' total installed capacity will increase by 38.2 percent to 1.21 billion barrels per day (bpd), while the new refineries will have a combined capacity of 600,000 bpd.

Developing refineries is meant to slash oil imports, which made up 10.8 percent of Indonesia’s total US$42.38 billion worth of imported goods in the third quarter of this year, according to Bank Indonesia (BI). Large oil imports only widen the trade deficit and place pressure on the rupiah exchange rate.

“In 2018, we still imported fuel products because our refineries’ total installed capacity was 1 million bpd. Their operational capacity was 850,000 bpd and their output 650,000 bpd [...], but our oil demand is almost double at between 1.3 million and 1.4 million bpd,” Lete said.

He added that development on the Balikpapan refinery was furthest ahead, with construction reaching 9 percent completing last month, ahead of the targeted 6 percent completion. The Balongan refinery, whose contractor will be announced in December, is not far behind.

However, Pertamina still failed to impress the Energy and Mineral Resources Ministry’s acting oil and gas director general Djoko Siswanto, who told the Post in a short text message: “I think [development] is not going fast enough.”

According to the Committee for the Acceleration of Priority Infrastructure Delivery (KPPIP), the four upgraded refineries should be completed by 2024 at the latest, while the two new refineries should be completed by 2025. Both targets are at least a year ahead of Pertamina’s expectations.

The company has faced several development setbacks, such as land disputes over the Tuban refinery and partnership disagreements over the Cilacap refinery.

The site of the Tuban refinery overlapped with land owned by the Environment and Forestry Ministry and the Cilacap refinery’s codeveloper, Saudi Arabian oil company Aramco, disagreed with Pertamina over the refinery’s commercial value, resulting in a delay in the creation of a joint venture to build the facility.

Lete said Pertamina and Aramco aimed to reach an agreement by December based on an independent valuation by Kuwaiti consultancy International Financial Advisors (IFA).

Nevertheless, the government’s emphasis on building refineries highlights how Indonesia’s energy policy is focusing more on efforts to reduce the trade deficit than on decarbonization, despite its ratification of the Paris Climate Agreement.

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