Pertamina eyes new refineries

JAKARTA, June 17, 2016 – Indonesia’s Pertamina will press on with its refining capacity expansion programme with two new facilities, the company’s vice-president for communications said on Friday. According to Wianda Pusponegoro, two 300,000-bpd greenfield refineries are necessary to keep up with Indonesia’s rising fuel demand, which is estimated to hit 2.6 million bpd by 2023.

Costs associated with the project will depend on whether or not Pertamina will opt for petrochemicals production. “We estimate that the investment required for an integrated refinery with petrochemicals production is about USD 12 [billion]-14 billion, but without petrochemicals, it is estimated to require about USD 10 billion,” Pusponegoro said.

Not having built a refinery in more than a decade, Pertamina in May this year gave Rosneft the green light to take on the development of the 300,000-bpd Tuban refinery. This, coupled with upgrade projects and existing capacity, should raise Indonesia’s refining capacity to some 2 million bpd.

A major partner in the work to increase refining capacity is Saudi Aramco, which is involved in the development of the 170,000-bpd Dumai plant in Sumatra and in West Java’s Balongan integrated refining and petrochemicals complex. In November 2015, Pertamina and Aramco inked a heads of agreement for the Cilacap refinery upgrade project.

The engineering, procurement and construction tender for upgrade work on the 260,000-bpd Balikpapan refinery is close to being issued. Located in East Kalimantan, work on the facility will get underway by year-end 2016 or early 2017, according to Pusponegoro.

“The Balikpapan revamp will be done in two phases. Phase one will be completed in 2019. It will increase the capacity by 100,000 bpd to 360,000 bpd, but at this stage we will not be able to process sour crude. That is why in the second phase, we will increase the flexibility of the refinery,” she said, adding that phase two would commence in 2020 and take two years to complete.

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