JAKARTA (TheInsiderStories) – Saudi Arabian Oil Co., (Aramco) quit from Cilacap oil refinery project owned by energy firm, PT Pertamina after a long discussion, said the director on Friday (06/05). Initially, both producers aims to settle the deal in this year, but one of the largest global oil producers decided pulled out from the state-owned company’ project.
According to the director, Ignatius Tallulembang, the cooperation ended in April 2020 after being extended at the end of December 2019. But, Aramco was still open to collaborating on existing projects, he asserted.
“Aramco said was still focused on other things, please continue, meaning that they could not join together to build the Cilacap Refinery,” he told the media today.
He added, at this time, Pertamina is in the process of finding new business partners while preparing for the next development process. Tallulembang asserted, with a total investment of around US$48 billion, refinery development master plan (RDMP) and grass root refinery (GRR) will provide jobs for around 130 thousand people during construction and around 10 thousand people during operations.
“With RDMP and GRR, then we will no longer be dependent on fuel imports, it will even become a fuel exporter, especially diesel and aviation fuel which is predicted to have a larger stock,” said Tallulembang.
In 2018, Pertamina and Saudi Aramco have agreed on Cilacap refinery joint venture. Both had previously expected to sign the agreement in November 2018. The signing was suspended as both parties could yet agree on four issues like crude oil supply, control management, asset valuation, and lifting.
On crude supply, they have agreed that Aramco will get 70 percent of supply. On management control, Pertamina will appoint three members of the board of directors, while Saudi Aramco will appoint two. On lifting, domestic refining will be handled by Pertamina and export may be carried out by both.
Currently, the refinery’ capacity is 348,000 barrel per day (bpd), which will be stepped up to 400,000 bpd. The fund worth of $5 billion has been invested to develop Cilacap refinery. Pertamina will hold 55 percent and Saudi Aramco with a 45 percent stake.
The development of the Cilacap Refinery is part of six RDMP and GRR projects to increase Pertamina’s fuel production capacity, from currently around 1 million bpd to around 2 million bpd. The six projects are Cilacap RDMP, Balikpapan RDMP, Balongan RDMP, RDMP Dumai, Tuban NGRR, and Bontang NGRR.
In addition to increasing refinery capacity, the quality of the products produced will be better, reaching the EURO V standard that is more environmentally friendly. Pertamina had also completed the Cilacap Blue Sky project, which began operating since March 2019, so that currently the Cilacap refinery has produced more environmentally friendly fuel oil with the EURO IV standard.
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