Pertamina temporarily extends condensate supply to TPPI
Friday, May 23 2014 - 01:33 AM WIB
Pertamina?s decision was made after its agreement, known as a ?tolling agreement?, with TPPI expired on Wednesday, leaving TPPI without a supply of condensate.
Ali Mundakir, Pertamina?s vice president for corporate communication, said the company would extend the agreement for three days and, then, it would consult with the upstream authority SKK Migas on an extension until June at the maximum.
The tolling agreement is part of a debt settlement agreement between Pertamina and TPPI following the latter?s debt default in 2012. TPPI has debts of US$406 million owing to Pertamina.
TPPI?s refinery, according to Pertamina?s previous statement, is able to produce 1.5 million barrels of diesel oil and fuel oil as well as 36,000 tons of LPG.
It also can produce up to 530,000 tons of petrochemical products, such as paraxylene, benzene, orthoxylene and heavy aromatic. Therefore, the continuation of TPPI?s refinery is deemed important for diesel and oil fuel supply and the petrochemical industry.
Ali said Pertamina wanted to continue its cooperation with TPPI but not under the tolling fee system.
Under the current tolling fee agreement, TPPI processes the condensate while the products are owned by Pertamina, which pays the processing fees to TPPI.
Pertamina, according to Ali, intends to sell its condensate to TPPI.
The tolling fee agreement has run for six months after becoming effective in November last year when TPPI?s refinery in Tuban, East Java, started processing condensate that could not be processed in Pertamina?s refineries.
The condensate is part of the government?s take. Under production sharing contracts of oil in the country, as much as 85 percent of production is the government?s share while 15 percent is for contractors.
However, there are some types of crude oil that cannot be processed by Pertamina?s refineries.
SKK Migas used to put the selling of its crude oil and condensate that could not be processed up for auctions. However, the oil and gas regulator has suspended all tenders after its previous chairman Rudi Rubiandini was involved in a bribery case with an oil trader.
SKK Migas? deputy for commercial control Widhyawan Prawiraatmaja said earlier that the condensate would be put up for auction should the TPPI contract not continue. (*)