JAKARTA (TheInsiderStories) – Indonesia is targeting six refinery projects worth US$60 billion of PT Pertamina to be completed in parallel in the next two years, the senior minister said today (11/11). It makes the state oil producer refinery capacity to be 2 million barrels per day in 2021 with a volume of fuel production of 200 million liters per day.
“The six projects of Pertamina with capital expenditure worth $60 billion will be completed in parallel, so we can accelerate the completion target in the next two years,” coordinating minister of maritime affairs and investments Luhut Binsar Pandjaitan told reporters in his office.
“Now we are evaluating one by one, it has been identified and next week Pertamina will report to me again about the time table,” the minister adds.
Pertamina has six refineries as national strategic projects. It consists of four refinery development master plans of Balikpapan, Balongan, Cilacap, and Dumai. Then, the remaining two are the new grass-root refinery of Tuban and Bontang.
Previously, Pertamina’s director of processing and petrochemical Ignatius Talullembang said the acceleration was one of which was applied in the Balongan refinery project. Pertamina saves a year by speeding up the auction process. Generally, after the front-end engineering design (FEED) bid, the company will conduct an auction. It took two years before entering the engineering, procurement, and construction (EPC) process.
“Currently we have prepared a fast track where the best FEED offer is directly EPC,” he said in Jakarta on Wednesday (11/07).
With these efforts, he is optimistic that the construction of the first phase of the Balongan refinery can be completed in October 2021, a year ahead of the target. After that, Pertamina began to work on second phase construction.
The acceleration of development was also carried out at the Balikpapan refinery project. The construction of the project has been running since February 2019 and now reaches 9 percent of the initially planned achievement of 6 percent. According to Talullembang, the project has been running according to the target. He is optimistic that the refinery can be completed in June 2021 and fully operational a year later.
Meanwhile, Pertamina is still discussing with partners from the Middle East to work on the Dumai refinery project. Talullembang targets that in December there will be a cooperation agreement to develop the refinery capacity from 140 thousand barrels per day to 300 thousand barrels.
Another project that is also in the negotiation stage is the Cilacap refinery project. Pertamina and Saudi’s Aramco are waiting for the results of the valuation calculation. Both parties are targeted to reach an agreement before the end of this year. As known the discussion between the two companies it hasn’t been final since two years ago.
“While Aramco is being evaluated because the difference is still $ 1.5 billion. In the next two weeks it can be resolved,” Pandjaitan said.
Pertamina also continues to accelerate the development of grass-root refinery (GRR) in Tuban and Bontang. The Tuban GRR has entered the implementation stage of basic design and FEED. At the end of last October, Pertamina and Rosneft signed a Tuban refinery design contract with a selected contractor.
In Bontang, Pertamina is completing the land acquisition. Pertamina’s official and the provincial government of East Kalimantan are currently discussing spatial and regional planning (RTRW). The refinery project with a capacity of 300 barrels per day is believed to be completed on target.
The refinery project is a government program to reduce imports of fuel products. The refinery capacity of only around 800 thousand barrels per day is not enough to meet the fuel consumption which reaches 1.4 million barrels per day. From the construction of six refineries operating in 2021, the government is targeting to increase capacity to two million barrels per day, Talullembang said.
Pertamina noted the six refineries will increase foreign exchange to $12 billion per year and additional tax revenue to $109 billion per year. A total of 172 thousand workers will be absorbed from the project and will also increase 30-50 percent of local resources.
Written by Lexy Nantu, Email: email@example.com