State-owned oil and gas giant Pertamina expects to strike gold on Dec. 22, when it is slated to host the CEOs of the world’s biggest crude oil producer, Saudi Aramco, in a bid to seal a joint venture agreement (JVA) for the upgrade of the Cilacap refinery in Central Java. The Cilacap project, which will cost a total of US$5.5 billion, is part of Pertamina’s Refinery Development Master Plan (RDMP) to upgrade four refineries. The other three are the Balikpapan refinery in East Kalimantan, the Dumai refinery in Riau and the Balongan refinery in West Java.
The upgraded Cilacap refinery scheduled to resume operations in 2022, is expected to be able to produce 370,000 barrels of oil per day (bopd), up from the current 345,000 bopd. The upgrade will also increase the refiner'y’s capacity to produce petrochemicals, such as aromatics, to 600 kilotons per annum (KTPA) and polypropylene to 160 KTPA. “We’ve gone down a long road to realize the collaboration with Saudi Aramco and both parties have responded positively to the process.
All of it will culminate on Dec. 22 when the CECS of the two companies will meet up in Indonesia,” Pertamina refinery director Raehmad Hardadi said recently. “Of course I don’t want to presage anything [...] but the meeting is expected to bring both parties to terms. Let’s hope for the best.” Previously in May the UK-based Amec Foster Wheeler Energy Limited was appointed to carry out the basic engineering design (BED) for the Cilacap refinery upgrade. The BED process is expected to be completed in March 2017, paving the way for Pertamina and Saudi Aramco to proceed with front-end engineering design (FEED) in 2018.
Once the JVA is signed, Pertamina will hold a majority stake of 55 to 60 percent in the Cilacap refinery upgrade project. Rachmad is optimistic that all Pertamina refinery development plans would proceed as well as expected. He even said the company would be able to complete all the projects in 2023, two years ahead of the governments original target, so that it could produce at least 2 million bopd, double last year’s production of 1 million bopd. “We want to reach a state of energ sovereignty in 2023, when we no longer import oil and even could start exporting some excess commodities,” Rachmad said.
By that time, Pertamina expects all of its refineries to have a Nelson Complexity Index (NCI) of more than 9, up from the current level of 5. The NCI measures the conversion capacity of a refinery to its distillation capacity. Moreover, by using state of the art technologies, Pertamina’s refineries are also expected to be able to process “sour” crude oil with sulfur content of 2 to 2.4 percent, compared Lo current refineries that are only able to process crude with less than 0.3 percent sulfur content. The oil is called “sour” when it has more than 0.5 percent sulfur level. As the impurities need to be removed before the oil is refined, oil with higher sulfur content will need a higher cost of processing, hence the higher-priced gasoline. “Therefore, if all of our refinery plans could happen, we won’t be Worried anymore about competing with other refineries across Asia because we’ll be using the newest technologies available,” Rachmad said.
Jakarta Post, Page-14, Monday,Dec,19,2016
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