Saudi Aramco wants to reduce stake in Cilacap refinery project
Thursday, August 25 2016 - 02:13 AM WIB
?In the Cilacap project, it (Saudi Aramco) has asked to decrease its share to 35 percent from 45 percent. I don?t know why,? Luhut said to reporters on Wednesday following a meeting with Government Special Envoy for the Middle East AlwiShihab. He suspected the reason is financially related.
Saudi Aramco currently has a 45 percent share in the US$5.5 billion project aimed at increase the capacity of the Cilacap refinery, while state-owned oil and gas firm Pertamina controls the remaining 55 percent. A reduction in the Saudi Aramco stake in the project may mean that Pertamina will have to absorb the difference, thus increasing its financial burden.
The upgraded Cilacap refinery is expected to be operational in 2022 with an increased production capacity of 370,000 barrels of oil per day (bopd) from 340,000 bopd.
Although the two firms signed a heads of agreement last November, a joint venture agreement is expected to be officially signed during the visit of King Salman in October this year.
The Cilacap project is part of Pertamina?s Refinery Development Master Plan (RDMP). Under the master plan, Pertamina is set to build several new refineries, including refineries in Bontang, East Kalimantan, and Tuban, East Java.It is also set to upgrade three existing refineries in Balikpapan, East Kalimantan, Dumai in Riau, and Balongan in West Java.
Saudi Aramco has also expressed interest in upgrading the Dumai and Balongan refineries, but has yet to take concrete steps in that direction. Each upgrade will cost around $5 billion.
Luhut said that the Indonesian government will discuss the planned investment by Saudi Aramco during the upcoming visit of King Salman to Indonesia, in the hope that the company would start realizing its promises. ?We want concrete investment, don?t only talk,? Luhut said, adding that Saudi Aramco has been lagging behind Russia?s Rosneft, which has started moving to realize the development of the Tuban refinery project in East Java.
The upgrading of existing refineries and construction new ones will produce a combined fuel output of 2.3 million bopd by 2025 from less than 1 million bopd currently. The country has relied heavily on imported fuel products to meet rising demand, amid limited capacity of domestic refineries.
Meanwhile, Pertamina Processing Director RachmadHardadi said that he is not aware of Saudi Aramco?s intention to reduce its stake in the Cilacap refinery project, Kontan reported.
Apart from the refinery projects, the government plans to offer Saudi Arabia several other projects to invest in, The Jakarta Post said.
Luhut said the Saudis were interested in developing 2x500 megawatt (MW) steam-fueled power plants in Sumatra and in partnering with Pertamina to supply jet fuel at the King Fahd International Airport in Dam-mam, Saudi Arabia. (*)