Pertamina to cease imports of petroleum in 2017

To stop importing refined petroleum products from abroad after 2017, a senior official of Indonesian national oil and gas company PT Pertamina, Rukmi Hadihartini, revealed the company planned to have built or expanded eight refineries by 2017 to more than double refining capacity to 2.2 million barrels per day from the current 1.03 million. The first project to start would be the expansion in 2012 of the Plaju refinery in Palembang, which would provide additional refining capacity of 20,500 barrels a day.

The next project would be the expansion of the Cilacap refinery in Central Java, which is the country’s biggest refinery, and has two crude distillation units with a capacity of 118,000 bpd and 230,000 bpd, supplying 34 percent of national demand, and 60 percent of demand in Java. The Cilacap refinery is expected to supply an additional 62,000 bpd capacity by 2013. In this $1.5 billion project, Japan’s Mitsui would join and hold 80 percent of the stake.

Some other Pertamina’s refinery projects are the expansion of Balikpapan refinery in East Kalimantan and the Balongan refinery in West Java in order to provide additional capacity of 40,000 bpd and 200,000 bpd respectively, the revamping of the Dumai refinery in Riau which would provide additional capacity of 200,000 bpd, and the construction of a new and low emissions refinery in Cilacap to add 19,000 bpd of the total demand. Those projects are expected to be completed in 2014. Another target which is set to start next year and expected to be completed in 2015 would be a new $7.8 million refinery in Banten on which Pertamina is cooperating with the National Iranian Oil Refining and Distribution Co. (Niordc), with each having a 40 percent stake, and Petrofield Refining of Malaysia, which holds the remainder. The consortium had finished the feasibility study and had agreed to give a stake to South Korean conglomerate STX. When the project is completed, it will account for a capacity of 150,000 bpd. The last project, Rukmi said, is a new refinery in East Java with a capacity of 200,000 bpd. However, he did not mention the specific location of the project. In the interview, he further mentioned that although there will still be a gap between supply and demand in 2017, the government won’t have to import refined products because we expect all of the alternative energy programs would be up and running by that stage, including the biofuel, coal gasification, and coal liquefaction projects. The current Pertamina’s six refineries operation is only enough to supply 70 percent of the domestic demand for petroleum products, with the balance having to be imported, while the national demand for petroleum products will increase by an average of 3.2 percent per year through 2017. Another government’s attempt to fulfill the gap, as had been said by the Energy Minister, Purnomo Yusgiantoro, is to persuade private sector investors to build refineries in Indonesia, including offering corporate income tax breaks and lifting taxes on construction input. MF

As published in MKK Newsletter July 2009