PT Pertamina is ready to integrate the PT Trans-Pacific Petrochemical Indotama (TPPI) refinery with the Tuban Petro's grass root refinery megaproject - Photo by Pertamina.

JAKARTA (TheInsiderStories) – Indonesia’s state-owned oil and gas PT Pertamina is ready to integrate the PT Trans-Pacific Petrochemical Indotama (TPPI) refinery with the Tuban Petro’s grass root refinery megaproject, the management has announced on Monday (01/13). The fresh move was carried out after the fuel company purchases Rp3.2 trillion (US$228.57 million) Tuban Petro series B shares, controlling a 51 percent majority stake.

Pertamina’s president director Nicke Widyawati explained the restructuring of Tuban Petro was part of the company’s refinery which prioritized flexibility. That is, refinery mode can switch to either petrochemical or mogas modes. This makes the refinery production can adjust to the demand at the time of operation.

“With the integrated supply of raw materials between the refinery, the efficiency can be improved. Both in terms of operational expenses and capital expenditures, so as to achieve maximum profitability,” Widyawati noted, hoping Pertamina refinery projects will be able to become sustainable businesses in the future.

Currently, Pertamina is developing refineries in six locations whose construction is integrated with the construction of a petrochemical plant. One of them is the Tuban Petro’s grass root refinery which will later be integrated with TPPI, with a connecting pipe as far as seven kilometers.

Widyawati revealed the petrochemical business market opportunity is currently around Rp40-50 trillion per year. Besides that, the petrochemical business also has a higher margin than fuel oil.

In accordance with the corporate budget, Pertamina would increase the aromatic production of TPPI refineries from now 46 thousand tons to 55 thousand tons per year. In the long run, the company will also build an Olefin Center that makes TPPI will produce petrochemicals as much as 700 thousand tons per year, Widyawati said.

At the same time, the Tuban Petro’s megaproject will have a petrochemical production facility with 1,205 ktpa of polypropylene products, 1,317 ktpa of paraxylene and 750 ktpa of polyethylene, according to Widyawati.

“The developments illustrate efforts to increase Pertamina’s capacity and competence to enhance the competitiveness of the country’s petrochemical industry,” she said, stressing the company is ready to reduce dependence on imported petrochemical products through the development of an integrated petrochemical business.

Two months ago Pertamina got investment from Abu Dhabi and Taiwan investors worth Rp100 trillion to build a petrochemical plant in Balongan refinery, Indramayu. The project starting this year and needs four to five years to complete and employ 30,000 to 35,000 local residents and a hundred technicians during the plant’s building.

Widyawati asserted, the refinery has produced oil 125,000 barrels per day and will upgrade to 350,000 barrels per day after the plant completed. While the petrochemical plant will produce 2.5 million naphthas.

On the other hand, Pertamina will allocate at least $3.7 billion to develop its upstream sector this year, from the total 2020 budget of $7.8 billion. It includes in the form of exploration and development of work areas managed by Pertamina.

US$1=Rp14,000

Written by Lexy Nantu, Email: lexy@theinsiderstories.com