Government wants Pertamina to complete refinery projects as scheduled

Petromindo

The government demands state-owned oil and gas firm PT Pertamina to complete all planned oil refinery projects as scheduled, and will help the company resolve the various obstacles, notably the problem of raising the required funds.

Director General of Oil and Gas at the Ministry of Energy and Mineral Resources, IGN Wiratmaja Puja said in a statement on Tuesday that the planned refinery projects must be completed as scheduled given the country?s continuing rise in the import of fuel oil products due to the limited capacity of existing domestic refineries.

The government has targeted Pertamina to complete all the refinery projects by 2023 at the latest. Wiratmaja said that Pertamina wanted the deadline to be stretched by another 1-3 years given the huge financial load of the projects.

?We want the refinery projects to be quickly completed as we?re importing much fuel oil. We have been in discussions on how to find solutions so that the refineries can be completed on time,? Wiratmaja said.

He said that one of options is for Pertamina to lower its share in the projects, while increasing the shares of private investors. He, however, said the government has yet to decide how much shares should Pertamina have in the projects.

Pertamina President Director Elia M. Manik told the House of Representatives Commission VII on energy and mining last week that the company could not possibly execute all of the projects at the same time given the huge funding requirements, suggesting delay in the construction and completion of the projects. He added that Pertamina has also been tasked with various other programs such as securing fuel oil supply at home, import crude oil and LPG, and acquiring and developing new oil and gas blocks.

Pertamina plans to expand the capacity of four existing refineries and to build two new refineries that would require an estimated total investment of US$36.27 billion including for the expansion and revitalization four refineries namely Balongan refinery (with investment requirement of $1.27 billion), Balikpapan refinery ($5.3 billion), Cilacap refinery ($4.5 billion), Dumai ($4.2 billion), and for the development of two new refineries including in Tuban ($13 billion) and in Bontang ($8 billion).

Pertamina is allowed to partner with investors in the refinery projects. The company has signed agreement with Russia?s Rosneft in the Tuban project in East Java, and with Saudi Aramco in the Cilacap refinery project in Central Java. The company is seeking partner for the Bontang project in East Kalimantan.

Editing by Reiner Simanjuntak