Groundbreaking of Balikpapan Refinery Set for December

Photo by Pertamina

JAKARTA (TheInsiderStories) – PT Pertamina, Indonesia’s state-owned diversified energy company, has announced it will inaugurate the groundbreaking of the Refinery Development Master Plan (RDMP) Balikpapan by the end of this year. President Director of Pertamina Elia Massa Manik said the company has set aside cash amounting to US$1.1 billion, for its portion, to develop the project.

Pertamina’s Director of Processing and Petrochemical Megaprojects Ardhy Mokobombang explained that Pertamina’s mega projects will require a total investment of $25 billion, both for upgrading (RDMP) and grass-roots refinery projects.

As for RDMP Balikpapan, the total cost is estimated at $4.6 billion, with completion projected for 2021; RFCC Cilacap, in cooperation with Saudi Aramco with total cost of $5 billion and RDMP Balongan, is scheduled to be completed in 2023. Meanwhile, the Dumai and grass-roots refinery (GRR) Tuban, in cooperation with Russian Rosneft, is set for 2024 and finally, GRR Bontang in 2025 with combined additional production capacity of 2 million barrels of oil per day by 2025.

Finance Director of Pertamina Arief Budiman said that in the period of January to September (9M) total revenues of Pertamina were recorded at US$31.38 billion, increased from the $26.62 billion for same period in 2016, for an 18 per cent rise, driven by higher oil price. However, its net profit dropped 29.68 per cent to $1.99 billion compared to $2.83 billion in the same period last year.

In the nine months, average price of Indonesian crude ICP stood at $48.88 compared to $37.88 for the same period in 2016.

“We are still optimistic that net income for the full year will be above $2.15 billion, supported by efficiency measures being undertaken by Pertamina as well as rising oil price, which is now hovering at $54 per barrel,” he told a press conference on Thursday (Nov. 2).

Pertamina has been undertaking eight programs, aiming at improving its efficiency. Budiman is optimist that with these efforts the company’s bottom line will rise to $2.5 billion in 2018. Commenting on the financing of the projects, he said the company currently has cash on hand amounting to $8 billion, which is adequate to support its mega-projects.

Pertamina’s Upstream Director Syamsu Alam said in 9M, Pertamina has produced 693 barrels oil equivalent per day (boepd) or up 7 per cent from last year at 646 boepd. Of this, oil production was recorded at 342,000 barrels of oil per day (bpd) compared to 309,000 bpd in the same period last year, while gas production rose 17.95 per cent to 2.30 trillion cubic feet (TCF) in the nine months to September 2017, compared to 1.95 trillion cubic feet in the same period last year.

Minister of State-owned Enterprises Rini Soemarno has set a target for Pertamina to become a holding firm of oil & gas that will acquire gas distributor PT Perusahaan Gas Negara Tbk (IDX: PGAS) by the end of 2017. Manik stated after a merger with PGAS, the total assets of the new holding body will reach $61.9 billion, from around $50 billion at present.

He admitted that there is still long way to go for the company to become the biggest energy player in the region. Manik said Thailand’s PTT and Malaysian giant oil and gas producer Petronas Bhd’s assets are three times bigger than those of Pertamina. To become the largest player in the region, he added, Pertamina needs government support, especially on regulatory aspects.

Linda Silaen, email: