Aramco may reduce stake in Indonesia refinery

JAKARTA, August 24, 2016 – Saudi Aramco could reduce its participation in the proposed USD 5.5-billion Cilacap refinery upgrade project in Central Java, Indonesia’s interim energy minister, Luhut Pandjaitan, said on Wednesday.

Pandjaitan said Aramco asked to cut its stake in the project from 45% to 30%. The project’s partner, Indonesia’s state-owned Pertamina, is likely to absorb this share.

The move would be a setback for Indonesia, as the country is looking to revamp its ageing energy infrastructure and increase its refining capacity. According to Pandjaitan, Pertamina has not received an official notification of Aramco’s intention to reduce its planned stake in the project. Aramco declined to comment.

The upgrade of the Cilacap refinery is designed to increase the facility’s crude processing facility from 348,000 bpd to 370,000 bpd. A heads of agreement for the project was signed between Pertamina and Saudi Aramco in November 2015.

In May 2016, an engineering and project management services contract was subsequently awarded to Amec Foster Wheeler to conduct the project’s basic engineering design. The project’s FEED is scheduled for completion in 2018, with EPC works starting in 2019. Commissioning of the facility is expected by the end of 2022.

The Aramco-Pertamina joint venture for the project is expected to be formalised in October this year during an official visit of Saudi King Salman bin Abdulaziz to Jakarta. Aramco has been looking at increasing its downstream and petrochemical investments in countries such as China, India, Indonesia, Vietnam and the US.