JAKARTA (TheInsiderStories) – Taiwanese state-owned oil refiner CPC Corp. is committed to investing US$22 billion for the development of the Balongan petrochemical refinery, the senior minister said today (01/17). In 2018, the company and Indonesia’s oil and gas holding PT Pertamina has signed a $6.49 billion framework agreement for the project.
“Later Pertamina will not be too active and have a large portion in the development of the Balongan petrochemical refinery. The CPC will be active in the production, processing, and marketing of petrochemical products,” Coordinating Minister for Maritime and Investment Affairs Luhut Binsar Pandjaitan told reporters at his office.
The cooperation between Pertamina and CPC is carried out in the form of the construction of a global-scale naphtha cracker plant and a global petrochemical downstream development unit in Indonesia, Pandjaitan said.
“CPC’s appointment is not without reason. CPC has been known as one of the leading companies in the international petrochemical industry. The company is expected to be an entry point for Pertamina to compete,” the minister revealed.
The Indonesian operator is committed to diversifying its business into new and renewable energy segments as support for the government program for an energy mix that targets new and renewable energy portions of 25 percent by 2025, the minister adds.
Later the naphtha cracker plant is expected to produce at least one million tons of ethylene per year and build a downstream unit that will produce other refined derivative products to meet the needs of the world industry, especially in Indonesia.
Several stages of refinery construction that must be carried out this year include completing a pre-feasibility study (FS), then starting a bankable feasibility study (BFS), environmental impact assessment (EIA) and land reclamation. The refinery is expected to start operating in 2026, Pandjaitan said.
Currently, Pertamina‘s petrochemical processing capacity is only 700 kilotons per annum (ktpa). However, its capacity will increase gradually as the refinery megaproject is completed consisting of two new refineries includes Tuban and Bontang, and four revitalized refineries such as Balikpapan, Cilacap, Balongan, and Dumai.
“In 2026, we will be able to produce around 6,600 ktpa of petrochemical products,” the minister said, adding the country spends $3 billion per year to import oil and gas which is almost 70 percent of the country’s national needs.
Previously, the Abu Dhabi National Oil Company (ADNOC) has signed a deal with Pertamina for oil and gas collaboration in both countries. As a part of the deal, which is estimated to be worth $2.5 billion, the two companies will collaborate to build a liquefied petroleum gas (LPG) storage facility in Indonesia.
Indonesia spends $3 billion per year to import LPG which is almost 70 percent of the country’s national needs. Last year, Indonesia suffered a trade deficit of $500 million in its trade with the United Arab Emirates (UAE). While the country’s imports from the UAE were worth $2 billion, its exports stood at $1.5 billion.
Written by Lexy Nantu, Email: email@example.com