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Pertamina cooperates with two companies from the United Arab Emirates (UAE) to develop energy potential and refinery production in Indonesia, namely Masdar which is a leading renewable energy company, and Abu Dhabi National Oil Company (ADNOC).
This commitment was announced in the presence of President Joko Widodo and President of the United Arab Emirates Mohammed bin Zayed Al Nahyan, during the peak of Business 20 (B20) activities in Nusa Dua, Bali, Monday (Nov 14).
The signing of the cooperation commitment was carried out previously some time ago in the UAE. The collaboration between Pertamina through Pertamina Power and New Renewable Energy (PNRE) with Masdar is the development of a Solar Power Plant (PLTS) in the Rokan Block with a cooperation agreement period of 2 years, starting November 12 2022 to 2024. PNRE and Masdar will work together to provide reliable and competitive solutions in the Rokan Phase 2 and Phase 3 PLTS development at the Rokan WK.
"This strategic collaboration between Pertamina NRE and Masdar will have the potential to accelerate the energy transition," said Pertamina Main Director Nicke Widyawati.
PLTS Rokan Phase-2 is currently under study with a potential capacity of up to 50-MWp with an estimated total investment value of US$ 47 million. Meanwhile, PLTS
Rokan Phase-3 with a potential capacity of up to 150 MWp with an estimated total investment value of US$ 140 million. This collaboration does not rule out opportunities for the development of other PLTS within Pertamina.
Pertamina Power Indonesia (PPI) as the PNRE operator will form a joint venture with Masdar with the composition of ownership in the cooperation, namely PPI as much as 55% and Masdar as 45%. Meanwhile, the off-taker for Solar PV is PT Pertamina Hulu Rokan (PHR) with the benefit of cost savings, a reduction in CO2 footprint of up to 184,000 tons per year, and a reduction in gas consumption of up to 2816 MMSCF per year.
In addition, PPI and Masdar also exchanged documents related to the Memorandum of Understanding for the Development of Renewable Energy Projects in Indonesia. These projects include developing new Renewable Energy (EBT) projects and sharing information for evaluating and analyzing project feasibility.
Not only with Masdar, but Pertamina is also collaborating with ADNOC regarding the potential for cooperation in the production of Polyolefins in Indonesia. The agreement period is 1 year (12 November 2022 – 2023).
While the potential areas of cooperation are exploring opportunities for participation in cracker projects & new derivatives of the PT Kilang Pertamina International (KPI) Polyolefin project in Indonesia, where ADNOC is interested in utilizing ADNOC technology for Polyolefins, the potential for marketing Polyolefin products by ADNOC and supplying feedstock such as naphtha, LPG and Propane.
Transition Process
Previously in the discussion session, Nicke also revealed that the energy transition process cannot be achieved in a short time. Requires various kinds of technology, costs, and human resources that are able to meet the standards of meeting the needs of renewable energy.
Meanwhile, when the transition process occurs the demand for energy needs also increases, so large-scale energy security must still be maintained. Nicke explained various strategies to face the challenge of alignment between transitions and energy needs.
To achieve Net Zero Emission (NZE) aspirations while maintaining energy security in Indonesia, PT Pertamina has developed a comprehensive strategy that is delivered through two main pillars and 3 intermediate implementations. The first two main pillars are to focus on decarbonizing business activities, and the second is the development of a green mixed energy business.
Then, three medium-term strategies that support the plan to drive Net Zero Emissions are first to develop carbon accounting standards that meet national and international standards. The second is stakeholder engagement to fully support the national NZE targets and commitments. This goal is supported by Pertamina's long-term investment strategy.
The third is Pertamina's environmentally friendly sustainability business initiative which will focus on Biofuels, renewable energy sources, Carbon Capture Systems (CCS/CCUS), batteries as well as electric cars, hydrogen, and carbon businesses. Pertamina has also developed a strategy to support the energy transition by allocating capital costs (CAPEX) for low-emission energy and EBT development.
"We have set a goal to increase the Green Business portion in Pertamina's revenue mix from 5 percent in 2022 to 13 percent in 2030," said Nicke.
Predictably, revenues from fossil fuels are expected to decline significantly from 86 percent in 2022 to 66 percent in 2040. The objective of this optimistic capital allocation has been coordinated with the Indonesian government and ensured that it is aligned with Indonesia's energy mix targets for renewable energy.
To offset financing, Pertamina has also implemented a long-term investment strategy consisting of 14 percent Capex for green energy business actions. In addition, Pertamina continues to invest in fossil fuels and petrochemicals as its current main business, in an effort to ensure that the energy transition will not interfere with energy security.
In addition to the capital investment strategy, Pertamina also collaborates with various parties to accelerate target achievement. Collaboration is needed, in facing the same challenges during the energy transition, especially in technology and financing.
“The cost of technology is still higher than fossil fuels. That's why, we are open to partnerships and collaborations, to drive innovation and lower technology costs, "explained Nicke.
Collaborative efforts are being intensified because currently the use of technology in new, renewable energy still requires high costs, so the selling price to consumers is still very high. In reducing these operational costs, financing issues are expected to attract more inward investment, both international and domestic, in order to improve global financing mechanisms to support energy transition and decarbonization projects.
Investor Daily, Page-10, Wednesday, Nov 16, 2022
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