Pertamina, Saudi Aramco to build $9b refinery in East Java

State owned oil and gas company Pertamina will team up with Saudi Aramco to build an oil refinery with a capacity of 300,000 barrels per day in Tuban, East Java, Investor Daily reported on Friday.

The two companies will soon sign a memorandum of understanding (MoU) for the construction of the refinery which will cost about US$9 billion to build. ?We hope we can sign the MoU in the middle of January,? Pertamina?s director for processing Edi Setianto said.

Edi, however, said that the construction of the refinery would be carried out only after the government agrees to provide incentives requested by the Saudi company. ?They want the government to provide the land for the refinery and to give protection against its production,? he added.

He said the Saudi company also asked the government to provide a guarantee that the refinery would use the company?s crude oil, as well as to remove import duty for the crude oil imports.

The Saudi company has pledged to provide a crude oil supply of 250,000 bpd for the refinery plant. The other 50,000 bpd will be provided by other supplier.

?So, it will take a year after the MoU signing to begin the construction,? he said.

The refinery is scheduled to begin commercial operation in 2018 with a capacity to produce 8.29 million kiloliters consisting of 3.93 million kiloliters of gasoline, 268 million kiloliters of diesel and 1.68 kiloliters of aviation fuel (avtur). (*)