Sep10 - Pertamina Reviews Viability of Bojanegara Refinery Project

Source Press
Company Pertamina 
Tags Refinery Project, Refining & Marketing Activities
Date September 02, 2010

(Jakarta Post) State energy firm PT Pertamina is reviewing plans to construct a fuel refinery in Bojanegara, Banten, saying the US$3 billion project may not be economically feasible.

“A study suggests the project is not economically viable. But, we are not saying we will drop the project as we still need to discuss this with our partners,” Pertamina spokesman Mochammad Harun said Wednesday.

Pertamina has established a joint venture with Iran’s Oil Refining Industries Development Company (ORIDC) and Malaysia’s Petrofield to construct the refinery. The refinery would have a processing capacity of up to 150,000 barrels of oil per day (bopd).

Pertamina currently has a 40 percent stake in the company, ORIDC holds 40 percent, and Petrofield holds 20 percent.

Pertamina said the ORIDC had committed to supply 150,000 bopd crude oil to the refinery.

Harun said Pertamina would re-evaluate the most economically feasible option, choosing between constructing the new refinery or expanding the capacity of its existing refineries.

Pertamina refineries director Edi Setianto said the project would not be feasible economically of it was only a refinery.

“With the current plan, the project will not be interesting economically. It is should be reintegrated with a petrochemical complex,” he said.

Edi added that a tax incentive from the government did not contribute significantly to the project’s economical aspect.

Oil and gas director general Evita Herawati Legowo said the government had only provided an income tax incentive to the refinery project. “Other incentives are still being proposed,” she said.

Pertamina has repeatedly asked for more incentives from the government, saying it had found difficulties attracting investors since refinery projects only have a small profit margin. In March, Japan’s Mitsui & Co. Ltd. pulled out of a joint venture with  Pertamina to upgrade a fuel refinery in Cilacap.

Pertamina’s Cilacap refinery has a processing capacity of 340,000 bopd. Pertamina operates five other refineries: in Balikpapan with a processing capacity of 260,000 bopd; Dumai with 170,000 bopd; Plaju with 110,000 bopd; Balongan with 125,000 bopd, and Kasim with 10,000 bopd.

In a bid to reduce fuel imports, Pertamina plans to upgrade the capacities of five refineries — in Plaju, Cilacap, Balikpapan, Dumai and Balongan.

As for the Cilacap refinery upgrade, Pertamina said it had short-listed five companies, including Japan’s Toyo Engineering,  Sinopec Corp, Italy’s Saipem and South Korea’s Hyundai Engineering, for the project.  Pertamina expects to decide the winner later this year.

Apart from upgrading its refineries, Pertamina also plans to build three new refineries in Cilacap (Blue Sky Cilacap Refinery); Banten (Banten Bay Refinery); and East Java (East Java Refinery).

Source: EvaluateEnergy® ©2020 EvaluateEnergy Ltd