Pertamina says refinery projects create heavy financial burden

Petromindo

State-owned oil and gas firm PT Pertamina said that its planned refinery projects is creating heavy financial burden for the company due to the huge financing requirement, suggesting that construction and completion of the projects may be delayed than initially planned.

Pertamina President Director Elia M. Manik was quoted by Bisnis Indonesia as saying that due to the huge funding requirement, the company can?t realize the investment plan in the refinery projects at the same time. ?We can?t possibly execute (the refinery projects) at the same time,? he said at a hearing session on Tuesday with the House of Representatives Commission VII on energy and mining in response to questions from lawmakers over the slow progress of the refinery projects.

Pertamina Director of Petrochemical and Refinery Megaproject, Rahmad Hardadi said that the company must carefully arrange the investment spending on the refinery projects so as not to disrupt other projects including acquisition of upstream assets and in carrying out its mandate to secure fuel oil supply at home, import crude oil and LPG.

Pertamina plans to expand the capacity of four existing refineries and to build two new refineries that would require an estimated total investment of US$36.27 billion including for the expansion and revitalization four refineries namely Balongan refinery (with investment requirement of $1.27 billion), Balikpapan refinery ($5.3 billion), Cilacap refinery ($4.5 billion), Dumai ($4.2 billion), and for the development of two new refineries including in Tuban ($13 billion) and in Bontang ($8 billion).

The government has previously set target for the projects to be completed between 2019 and 2023. Pertamina is allowed to partner with investors in the refinery projects. The company has signed agreement with Russia?s Rosneft in the Tuban project in East Java, and with Saudi Aramco in the Cilacap refinery project in Central Java. The company is seeking partner for the Bontang project in East Kalimantan.

Bisnis Indonesia said that Pertamina has informed Saudi Aramco about the possible delay in the completion of the Cilacap project, and is scheduled to meet with Rosneft today.(*)