Aug 13 - Pertamina to Upgrade Refineries

Source Press Release
Company PertaminaKuwait Petroleum Corporation 
Tags Refinery Project, Refining & Marketing Activities
Date August 28, 2013

State energy company Pertamina plans to upgrade its existing oil refineries with a $7 billion investment plan that will boost its combined oil-processing capacity, a company official said on Thursday.

Chrisna Damayanto, a director for processing at Pertamina, said the Jakarta-based company is partnering with UOP, formerly known as Universal Oil Products, a unit of US manufacturing giant Honeywell, to conduct a feasibility study for the upgrade.

The upgrade will involve Pertamina’s refineries in Balongan (West Java), Cilacap (Central Java), Balikpapan (East Kalimantan), Plaju (South Sumatra) and Dumai (Riau).

The combined oil-processing capacity of these refineries is currently 1 million barrels a day. The upgrade is expected to lift the figure to 1.2 million barrels.

“It [the additional capacity] is equivalent to the capacity of one refinery,” Chrisna told reporters at the headquarters of the Energy and Mineral Resources Ministry.

Chrisna said feasibility study for the $7 billion project will be concluded next year, with the project itself potentially starting in 2015. The work is estimated to take three years.

Pertamina’s refineries will also be able to process so-called “sour crude oil,” which has higher sulfur content, he said.

Indonesia must import a significant quantity of oil given the nation consumes 1.4 million barrels of petrol products per day on average, higher than Pertamina’s existing capacity.

In a separate announcement, Pertamina president director Karen Agustiawan said on Thursday that the company has secured a $1 million grant from the US Trade and Development Agency to perform a financial feasibility study for its refinery development masterplan.

“The masterplan will serve as a guideline to make Pertamina a world-class company in downstream business,” Karen said, referring to input processing.

If Pertamina’s plan is successful it will increase its total refinery output by more than 50 percent by 2018.

Pertamina intends to invite foreign companies to join a project to build two more refineries, Karen said, as quoted by Investor Daily on Wednesday.

Pertamina has previously struck deals with overseas partners  Kuwait Petroleum Corporation and  Saudi Aramco to build the two refineries, which cost up to $14 billion. Each refinery is designed to process up to 300,000 barrels of crude oil a day.

The Indonesian state-controlled company sought a tax holiday and custom tax incentive for the projects given the size of the investment, but the request for the tax holiday was turned down.

Bambang Brodjonegoro, the head of fiscal policy at the Finance Ministry, said in May that Pertamina’s partners demanded a 30-year tax holiday, while the maximum period allowed is only 10 years.

Source: EvaluateEnergy® ©2020 EvaluateEnergy Ltd