Sector News

Pertamina and Saudi Aramco ink deal for refinery, petchems in Indonesia

November 26, 2015
Chemical Value Chain

Indonesia’s state energy group Pertamina (Jakarta) and Saudi Aramco, the state-owned oil company of Saudi Arabia, on Thursday signed a heads of agreement for joint ownership, operation and upgrade of the Cilacap refinery in Central Java, Indonesia with an estimated cost of $5.5 billion. The project forms part of Pertamina’s refinery development master plan (RDMP).

The ceremony was attended by Indonesian vice president Muhammad Jusuf Kalla; ministers from the Indonesian cabinet; the Saudi Arabian Ambassador to Indonesia Mustafa Al Mubarak; president and CEO of Saudi Aramco Amin Nasser; and president director and CEO of Pertamina Dwi Soetjipto.

The signing was held during the vice president’s inauguration of a new residual fluid catalytic cracking facility at the Cilacap refinery, and the kick off of the new project, both of which are designed to produce higher quality gasoline. The proposed Cilacap refinery upgrade will enable the refinery to process more sour crudes, meet high quality product specifications (Euro IV) and produce basic petrochemicals, including para-xylene, propylene, polypropylene, as well as lubricant base oils. The capacity expansion from 348,000 bbl/day to 370,000 bbl/day will help Indonesia meet its increasing demand of refined products, lubricant base oils and petrochemicals. The deal includes a long-term supply agreement for Arabian crudes to the Cilacap refinery. It will pave the way for the next phase of development within the scope of collaboration between the two parties. The basic engineering design study for the Cilacap refinery upgrade is expected to commence soon and be completed in 2016. This will be followed by front-end engineering design during 2017, the engineering, procurement and construciton contract award in 2018 with completion scheduled for 2021.

“Indonesia is a rising global powerhouse in the global economy, and it has long deep rooted cultural ties with Saudi Arabia. It’s refining sector has enormous potential, and with Indonesia’s fast-growing demand for refined products, Saudi Aramco’s role in Cilacap can help fuel this country’s coming era of development and prosperity,” said Amin Nasser, president and CEO of Aramco at the signing ceremony.

Participation in the RDMP will offer Aramco a major growth component of its global downstream expansion portfolio aspiration, designed to make Aramco the world’s leading integrated energy and chemicals company. In July 2014 Pertamina offered Aramco and other strategic partners the opportunity to participate in its RDMP to upgrade and expand five existing domestic refineries, Cilacap, Balongan, Dumai, Plaju, and Balikpapan, from 820,000 bbl/day to a combined 1.68 million bbl/day. Aramco was selected by Pertamina as a strategic partner for three of the five refineries: Cilacap and Balongan in Java; and Dumai in Sumatra.

Aramco signed a memorandum of understanding on 10 December 2014 giving the company exclusivity to conduct a feasibility study jointly with Pertamina for the three refinery expansions and negotiate key business principles.

By Natasha Alperowicz

Source: Chemical Week

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