Investment Management of Pertamina Refinery Project

      Coordinating Ministry of Maritime and Pertamina Investment Management of Pertamina Refinery Project

The Maritime and Investment Coordinating Ministry will oversee all the refinery projects worked on by PT Pertamina (Persero). This follows the continued refurbishment of the Pertamina refinery project with its two partners, Saudi Aramco and Overseas Oil and Gas (OOG) Llc.

Deputy of Maritime Sovereignty and Energy of the Coordinating Ministry of Maritime Affairs and Investment Purbaya Yudhi Sadewa said the refinery project will continue. Regarding the withdrawal of two Pertamina partners from the national refinery project, this does not mean that the interest of international oil and gas companies to work on refinery projects is minimal.

"I am still optimistic that refinery investment will continue if it is well guarded," he said.

CPC Corporation - Taiwan

He recounted that he participated in overseeing one of the Pertamina refinery projects in Balongan, West Java Province, which is a refinery project that processes crude oil into petrochemical products. He continued to convince Taiwan Petroleum Corporation (CPC) of Taiwan to continue working with Pertamina. In fact, with the fall in oil prices, some companies actually withhold investment.

For information, at the end of last week, Pertamina and CPC signed the Head of Agreement / HoA for the development of the Integrated Petrochemical Industry Complex in Balongan. The petrochemical project is targeted to start operating in 2026. Purbaya said that the refinery project has many obstacles. One of them is the oil and gas mafia which complicates the construction of refineries.

oil and gas mafia

"I realize that investing in refineries is huge. We are dealing with oil and gas mafia. We are escorted. This can take place well, "he said.

Meanwhile, Energy Observer from Trisakti University Pri Agung Rakhmanto revealed, the investor's decision to invest in a project is very dependent on the return on investment from the project. If the return on investment offered falls within their criteria and there is a guarantee of certainty, investors will also work on the project.

"That's the principle. As long as there are no bright spots, investors will look for other investments, "he stressed.

He suggested, because Indonesia, which needed this investment, should be able to provide a guaranteed rate of return on investment for the refinery project. Moreover, the partnership between Pertamina and other oil and gas companies will facilitate the completion of the refinery project.

"If it can be a partnership, why should it be alone? If in business and investment, partnerships will not only strengthen but also for risk sharing, "explained Pri Agung.

Previously, in February, Pertamina said that it would not continue to work together on the development of the Bontang Refinery with OOG. Pertamina and OOG did not extend the framework agreement / FWA which formed the basis for the two companies to form a joint venture.

Pertamina also did not continue to cooperate with Saudi Aramco in the project of upgrading and upgrading the Cilacap Refinery. The reason is that the oil and gas company originating from Saudi Arabia is still focused on working on other projects, while Pertamina hopes to be able to work on the refinery project soon.

Still interesting

Purbaya added, oil and gas companies are still interested in working on refinery projects in Indonesia. One of them is that there is a company from China that plans to build a refinery. Unfortunately, Purbaya claimed not to know the details of the refinery project, including its capacity.

"There is a Chinese company asking for our approval to support the investment of US $ 6 billion-US $ 8 billion in the Batam, Riau Islands region," he said.

According to him, it is likely that the Chinese company will work on the refinery project itself, aka not cooperating with Pertamina. However, for the sale of refinery products, it is possible that the company will cooperate with Pertamina.

"But they say they can also sell international markets. Therefore the choice is in the Riau Islands Region, near international shipping lines, "said Purbaya.

In addition, Purbaya added that investment interest in the national refinery project was also conveyed by companies from the United Arab Emirates (UAE), namely the Abu Dhabi National Oil Company (ADNOC) and Mubadala Investment Company.

"So the enthusiasm and interest of investing in refineries is still very large," said Purbaya.

Referring to Pertamina's official statement, ADNOC agreed to learn more about the potential for developing the Integrated Petrochemical Refinery Complex in Balongan, West Java. Pertamina and Adnoc signed a memorandum of understanding at the end of last year.

the Tuban Refinery in East Java by Rosneft

While the Mubadala Investment Company is interested in becoming an investor in the Balikpapan Kalimantan Province Refinery Project worth the US $ 5.5 billion. In addition, Pertamina also continues to work on the Tuban Refinery in East Java with Rosneft Oil Company as its partner. 

    The two companies have formed joint ventures, namely PT Pertamina Rosneft Processing and Petrochemicals. Now the project has reached the stage of land acquisition and preparation of engineering design (general engineering design / DED).

Investor Daily, Page-10, Thursday, June 11, 2020.

The Government is Ready to Bite the Oil and Gas Mafia

      Adjustment of gas prices for industries is needed to encourage Indonesia's competitiveness from products produced to attract investors. The government is preparing a strategy to eradicate the mafia of the oil and gas sector which causes high prices.

Presidential Chief of Staff General Moeldoko

"The president always said that the oil and gas business must really be able to operate properly. He has often said such strong words, I don't think it should reach the President, if necessary 'bite', yes I will bite first, "said Presidential Chief of Staff Moeldoko at the Bina Graha Building, Jakarta.

Basuki Tjahaja Purnama

Moeldoko has invited PT Pertamina's chief commissioner Basuki Tjahaja Purnama to discuss a number of issues in the oil and gas sector. He expressed the direction of President Joko Widodo in the context of improving the oil and gas sector. One of them, namely the reduction in industrial gas prices that must be done. Moeldoko stressed he would oversee Jokowi's policy to reduce oil and gas prices.

Two issues discussed by Moeldoko with Ahok, greeting Basuki Tjahaja Purnama, were the matter of the President's directives to reduce the price of industrial gas and the management of strategy at PT Pertamina.

"The point is that all the President's policies in the context of oil and gas must be able to run as well as possible and there is not a single thing that can block it," said Moeldoko.

Adjustment of gas prices for the industry is needed to encourage Indonesia's competitiveness, both from products produced and attracting investors into the country. Meanwhile, Basuki said that Moeldoko had been trusted to carry out the President's direction, the company's strategic policy had been prepared and ready to be implemented immediately.

"We already have the formula. Later you will ask questions to the president director, "said Basuki.

To be sure Pertamina is confident that their steps will be supported by the government.

the oil and gas mafia

Seriously Fix

Energy observer Fahmy Radhi told Media Indonesia that the current government really often handles oil and gas mafia issues.

"Starting with Mr. Jokowi, he was angry at someone who was happy to import, even biting like that. Then also, Jokowi ordered the Head of the Criminal Investigation Section to oversee the construction of the refinery. Then also, I thought that the appointment of Ahok was also intended to eradicate the oil and gas mafia in Pertamina, "he said.

Fahmy revealed the oil and gas mafia used two weaknesses. "First, the weakness of decision making. That one can be bribed, can be controlled. It could be within the scope of government and also Pertamina "Fahmi said.

The second is to take advantage of governance that is not transparent or made transparent.

"That can be easily exploited by the oil and gas mafia earlier. Can be manipulated, "he continued.

To overcome this, Fahmy added, the government needed to work extra. Leaders or decision-makers must be people who have integrity. 

   In addition, it is also necessary to improve the governance of companies involved such as Pertamina because according to him, the oil and gas mafia in companies or government agencies is related to the wider oil and gas mafia.

"Inside, Pertamina is related to mafias, also those outside Pertamina. Like that systematically, "he said.

Media Indonesia, Page-13, Wednesday, Jan 15, 2020