State energy holding company Pertamina on Monday said it appointed South Korea’s SK Engineering & Construction Co. and Hyundai Engineering & Construction Co. as engineering and construction contractors for its Balikpapan refinery upgrade.
Upgrade work at the US$ 4 billion Balikpapan project, in East Kalimantan will now start at the beginning of 2019, Pertamina executive Ignatius Tallulembang said at a media briefing. Development will be jointly undertaken with state-owned construction firm PT Pembangunan Perumahan Tbk and state engineering firm PT Rekayasa lndustri (Rekind), Tallulembang said. When the upgraded refinery goes onstream in August 2023, it will produce fuel to the “Euro V” emissions standard, he added.
The upgrade comes as Southeast Asia’s largest economy hopes to reduce its dependence on costly oil product imports, currently meeting around a third of its fuel needs of around 1.4 million barrels per day. But a program launched in late 2014 to double lndonesia’s refinery output has faced multiple setbacks, as the country has continued to struggle to attract investment in the sector.
Earlier plans to upgrade Balikpapan with Japan’s JX Nippon fell apart in early 2016, but as recently as August this year it was seeking to revive that partnership, or form a new one with Azerbaijan’s Socar for the project. At the same event, Pertamina signed a framework agreement with Omanfs Overseas Oil and Gas LLC (OOG) to develop a new $10 billion refinery and petrochemical complex in Bontang, also on Borneo.
Framework Agreement
State-owned OOG, which is taking a majority stake in the project, was chosen for its financial capability Pertamina chief executive Nicke Widyawati said. Pertamina is in talks with OOG to increase its share ofthe project to 20-30 percent from 10 percent under the current plan, Tallulembang said. It was not immediately clear how much of the project cost will be carried by OOG.
Nicke Widyawati
Widyawati declined to comment on why Japan’s Cosmo Energy Holdings, earmarked in January for partnership in the project, was not included in the latest agreement. Over the next year, Pertamina and OOG plan to carry out a feasibility study for the project. Once completed, OOG is expected to supply 300,000 bpd of crude oil to the refinery, Tallulembang said.
Omanfs Overseas Oil and Gas LLC (OOG)
Pertamina now expects all six of its refinery projects including the Balikpapan, Cilacap, Balongan and Dumai refinery upgrades and the Bontang and Tuban grassroots developments to be completed by the end of 2026, Widyawati said.
“We recognize that the refineries have experienced delays [but] better late than never,” Widyawati said.
Jakarta Post, Page-13, Tuesday, Dec 11, 2018
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