Pertamina delays decision on partner for Tuban refinery project
Tuesday, March 1 2016 - 08:13 AM WIB
State owned oil and gas firm PT Pertamina (Persero) has delayed decision on partner to develop the Tuban refinery project in East Java, according to a source.
The firm has shortlisted five potential partners through beauty contest held since January of this year, namely Rosneft, Saudi Aramco, CNOOC, Kuwait Petroleum International (KPI) and the PTT Thailand-Thai Oil consortium. Initially, the firm planned to take its pick among the five firms at the end of February. However, the firm has yet to make a decision.
?It has been delayed. The decision was supposed to be made end-February. It seems that the decision will be made in the middle or at the end of March. The problem is that Pertamina has yet to talk with the CEO of one potential partner,? the source said.
One of the issues questioned by the potential partners are the economics of the project, the Internal Rate of Return (IRR).
The government has promised incentives for the US$18 billion project. The incentives include the investors may use lands for the project gratis for between 50-80 years, Minister of Energy and Mineral Resources Sudirman Said said on Monday.
?There are also other incentives such as tax holiday, offtaking assurance. Pertamina will become the offtaker,? Sudirman said.
Sudirman said the government is considering four schemes for the development of the project: First, the project will be financed with state budget; second, it will be developed by the government in partnership with private companies; third, it will developed by the SOE in partnership with private companies; fourth, it will be developed solely by private companies.
Editing by Johannes Simbolon