Pertamina asks government to review refinery plans

Petromindo

State-owned oil and gas firm PT Pertamina has asked the government to review its policy of assigning the company to develop two new oil refineries and expand four existing ones given the current government policy to also boost development of renewable energy sources, Bisnis Indonesia reported on Tuesday.

The paper quoted Pertamina President Director Elia M. Manik as saying that the review is needed to avoid the refineries from becoming idle in the future as the government is also moving to increase production of renewables and clean energy.

?This is why planning is important. Don?t make (new refineries) when it (later) become idle,? he said during a hearing with the House of Representatives Commission VII on energy and mining on Monday.

The country?s existing refineries have a combined production capacity of around 800,000 bpd, while domestic fuel demand stands at around 1.6 million bpd, forcing the country to import fuel products to meet the demand. To help resolve the problem, the government has assigned Pertamina to develop two new refineries namely Tuban and Bontang refineries, and expand existing ones including Balikpapan, Cilacap, Balongan and Dumai, all of which must be completed by 2023, which will increase total capacity to 2 million bpd, when domestic fuel demand is project to reach near 2 million bpd.

The refinery projects are estimated to cost around US$36.27 billion. So far, the company has signed agreement with Russia?s Rosneft to partner in the development of the Tuban project, and with Saudi Aramco in the Cilacap project. Pertamina is still struggling to get partners in the other projects.

Pertamina has recently appealed to the government for a delay of up to three years in the completion of some of the projects given the huge financial load, and as the company is also financing other large upstream and downstream projects. (*)