JX Nippon backs down from Balikpapan refinery project

State-owned oil and gas firm PT Pertamina has decided to go alone in the planned revitalization and capacity expansion of the Balikpapan oil refinery in East Kalimantan after it fails to secure a partnership with Japan?s JX Nippon Oil and Energy.

Pertamina President Director Dwi Soetjipto said on Wednesday that the deal with JX Nippon, which was supposed be signed last year, was cancelled as the Japanese firm proposed investment cost of US$6 billion, which is higher than the $5 billion limit set by Pertamina. JX Nippon also stated that it could only complete the refinery revitalization project in 2024, later than the 2021 target wanted by Pertamina.

Dwi said that his company has decided to develop the revitalization project on its own, cutting down the investment cost to $4.6 billion. The initial plan to increase the refinery?s capacity to 360,000 bpd from the current 260,000 bpd, however, remains intact, he added.

The planned project will be implemented in two stages, with the first processing capacity expansion stage to be completed in 2019 with planned investment of $2.6 billion, and product quality upgrade to be completed in 2025. (*)