Pertamina chooses Shell?s refinery to process Iraq?s crude
Friday, July 1 2016 - 12:48 AM WIB
State owned oil and gas firm PT Pertamina (Persero) has chosen Shel?s refinery in Singapore to process its crude from West Qurna 1 in Basra, Iraq.
Senior Vice President Integrated Supply Chain (ISC) Daniel Purba said the volume of crude to be supplied by Pertamina to the refinery reaches 1 million barrels per month. The crude is expected to be processed into LPG, jet fuel, diesel oil and other petroleum products. All the output will be brought into Indonesia to meet the domestic demand.
?Basically, the deal with Shell has been clinched,? Daniel said.
In the first stage, Pertamina will lease the refinery for the period of July-December 2016. If the deal proves profitable for Pertamina, the firm will be likely extend the leasing contract.
He said Pertamina elected to lease the refinery based on the offer from Shell. The offer was considered better than those from other companies. The fact that it is located in Singapore also makes the offer interesting because it is close to Indonesia and potentially provide better profit for Pertamina.
Going forward, Daniel said Pertamina will likely lease other refineries from other companies if the firm gets additional crude supply from overseas.
Daniel also said Pertamina is looking for crude from other sources aside from Iraq. One of the sources is Iran. In the first phase, Iran will deliver on cargo of Iranian Light Crude to Cilacap refinery on trial purpose to see whether the crude is suitable for the refinery.
The trial is expected to happen in the third quarter of the year. If the result is good and the production increases, the Iranian crude can be used as alternative feedstock. ?We don?t want to talk about long term. We should try first. Later, we shall talk about the follow-up,? Daniel said.
Editing by Johannes Simbolon