To be efficient, the government must help Pertamina

    The government should be able to help PT Pertamina (Persero) to get a contract to purchase crude oil directly from the National oil company/NOC of another country. Direct import contracts are considered more efficient because they can cut the cost of procuring crude oil.

PT Pertamina (Persero)

    The Executive Director of the Reforminer Institute, Komaidi Notonegoro, said that purchasing crude oil directly from NOCs of other countries would cut the supply chain of crude oil. This will have an impact on cheaper procurement costs, so it is positive for Pertamina, the government, and the community as consumers of fuel oil (BBM).

the Nigerian National Petroleum Corporation (NNPC)

    Pertamina's move to buy crude oil directly from the Nigerian National Petroleum Corporation (NNPC) is considered very positive. However, the company needs to be more aggressive in obtaining long-term direct purchase contracts to secure domestic fuel supplies.

“Generally there is state intervention. The agreement will generally be accompanied by bilateral cooperation in the same sector or other sectors," he said.

    Pertamina is not the first time buying Nigerian crude oil. Previously, for the 2017-2020 period, oil imports from Nigeria reached 30% of the company's total imports. This Nigerian oil belongs to the sweet crude category which is in accordance with the company's refinery specifications.

    However, this crude oil is usually marketed in the international market by International Oil Companies (IOCs) with participating interest (PI) in the oil and gas blocks in the country, such as ExxonMobil, Chevron, Shell, Total, and BP. Thus, this is the first time Pertamina has conducted a direct purchase contract with NNPC. In obtaining this contract, Pertamina must compete with 500 companies that register.

    According to Komaidi, the state usually helps its national companies to obtain similar agreements. He gave an example, the United States government does not even hesitate to intervene directly to help business entities originating from their country, even though they are not state-owned enterprises.

"Especially if this is Pertamina, which is a State-Owned Enterprise (BUMN)," he asserted.

    Currently, Pertamina seems to be left to do it alone. Whereas on the other hand, the government assigns and demands a very large tax contribution and Non-Tax State Revenue (PNBP) from the company. 

    Regarding the crude oil import contract with NNPC, Corporate Secretary of PT Pertamina Indonesia Refinery Ifki Sukarya said the volume will adjust to the development of refinery supply and demand in the coming year. This purchase contract is one of the efforts to ensure a sufficient supply of crude oil at the refinery.

"The estimated volume of crude oil supply from NNPC is currently around 900,000 barrels per quarter," said Ifki.

    Previously, KPI's Vice President of Feedstock & Inventory Management, Sani Dinar Saifuddin, said that Nigeria is Pertamina's largest source of crude oil imports. Meanwhile, the largest oil import is the type of Arabian Light Crude from Saudi Arabia's national oil company, namely Saudi Aramco.

Investor Daily, Page-10, Friday, July 23, 2021

Pertamina Imports Crude Oil from Nigeria

    PT Pertamina (Persero) through PT Pertamina International Refinery (KPI) received a crude oil procurement contract from Nigeria. The import of crude oil was obtained by Pertamina from the Nigerian National Petroleum Corporation (NPCC).

NPCC

    Director of Feedstock and Product Optimization of KPI Yoki Firmandi said this is the first direct contract between Pertamina and NPCC, although Pertamina often buys Nigerian oil. So far, Pertamina has had to buy Nigerian crude oil through the international open market that has a Participating Interest, such as ExxonMobil, Chevron, Shell, Total, and BP.

Pertamina

"With Pertamina's direct deal with NPCC, the procurement process can take place more efficiently. Of course, getting a contract directly will be more efficient. This is in accordance with the refinery feedstock optimization plan in the future,” said Yoki.

    Pertamina was selected as an awardee from a total of 500 companies that registered. NNPC is a Nigerian National Oil Company, like Pertamina in Indonesia. The direct supply contract is very important for bilateral relations between the two countries. Yoki said that Nigerian crude oil is sweet crude.

    This direct contract has a duration from 2021 to 2023. Yoki explained that KPI was not alone in getting this direct contract. Purchasing crude oil directly to the NPCC is expected to increase the efficiency of purchasing crude oil directly to oil producers.

    KPI synergizes with Subholding Shipping PT Pertamina International Shipping (PIS) in terms of transportation. PIS has just launched two new Very Large Crude Oil Carrier (VLCC) vessels, namely MT Pertamina Prime and MT Pertamina Pride. Later the oil will be transported by a ship owned by PIS.

VLCC MT Pertamina Prime

    In addition, Pertamina International Marketing & Distribution, Pte Ltd (PIMD) under Subholding Commercial and Trading also played a role in supporting KPI in obtaining the contract. Vice President of Feedstock and Inventory Management KPI Sani Dinar Saifuddin said Nigerian oil has a large portion of Pertamina's oil import volume. In the 2017-2020 period, 30 percent of the volume of imported crude oil came from Nigeria. Pertamina's crude imports in 2019 amounted to 75.3 million barrels.

"Nigeria is Pertamina's second-largest source of crude oil imports, after Arabian Light Crude supply to FOC I RU IV Cilacap from NOC Saudi Arabia Aramco," said Sani.

 

Aramco

    Meanwhile, crude oil imports this year are projected to increase significantly compared to 2020. According to Pertamina's 2021 projection data, crude oil imports are targeted to reach 118.4 million barrels, an increase of about 50.4 percent compared to last year's crude oil imports which were only 78.7 percent. million barrels.

Nicke Widyawati

    Pertamina President Director Nicke Widyawati said Pertamina needed to maximize the refinery processing capabilities that needed to be supplied with oil. In addition, there was a decrease in GOI entitlement due to the still low Indonesian oil price (ICP).

"We have an increase in imports of 39.7 million barrels," said Nicke.

    Previously, Nicke projected that the volume of crude oil imports this year would increase to 118.4 million barrels. This projection is up 50.4 percent from the realization of crude oil imports throughout 2020 which reached 78.7 million barrels. The increase in crude oil imports is part of Pertamina's refinery optimization strategy.

Republika, Page-9, Wednesday, July 14, 2021

Pertamina Imports Crude Oil Directly from Nigeria

    PT Pertamina (Persero) through PT Refinery Pertamina Internasional (KPI), managed to get a contract to import crude oil directly from the Nigerian national oil and gas company, namely the Nigerian National Petroleum Corporation (NNPC). This direct contract makes the cost of procuring crude oil more efficient. 

the Nigerian National Petroleum Corporation (NNPC)

    In general, Nigerian crude oil is marketed in the international market by the International Oil Company (IOC) which has Participating Interest (PI) in the oil and gas blocks in the country, such as Exxon Mobil, Chevron, Shell, Total, and BP. The direct agreement between Pertamina and NNPC makes the procurement process more efficient.

"Of course, getting a direct contract will be more efficient which is in line with the refinery feedstock optimization plan in the future," said KPI's Director of Feedstock & Product Optimization Yoki Firnandi.

    The crude oil import contract with NNPC is valid from this year until 2023. The entire supply of oil is to meet the feedstock needs of Pertamina's refineries. Previously, for the 2017-2020 period, oil imports from Nigeria reached 30% of the company's total imports. This Nigerian oil belongs to the sweet crude category which is following Pertamina's refinery specifications.

Aramco

"Nigeria is Pertamina's second-largest source of crude oil imports, after Arabian Light Crude supply to the Cilacap Refinery from Saudi Arabia's NOC (national oil company/national oil company), Aramco," said Pertamina's Vice President of Feedstock & Inventory Management, Sani Dinar Saifuddin.

    To get the supply of Nigerian crude oil, Pertamina must compete with 500 companies that register. The direct contract with NNPC is Pertamina's first achievement. Pertamina International Marketing & Distribution Pte Ltd (PIMD) under PT Pertamina Patra Niaga as Subholding Commercial Marketing also supported KPI in getting the contract.

the Pertamina Prime VLCC

    Later, the transportation of crude oil from Nigeria will be carried out by PT Pertamina International Shipping (PIS). Moreover, PIS has completed the procurement of two very large crude carriers (VLCC), namely the Pertamina Prime and Pertamina Pride tankers.

Nicke Widyawati

    Previously, Pertamina President Director Nicke Widyawati said that after forming the sub-holding, subsidiaries were given the freedom to formulate types of crude oil that could produce good quality and better yields of valuable products. So, her party decided to use imported crude oil more. 

    Referring to Pertamina's data, imports of crude oil this year will reach 118.4 million barrels, up 39.7 million barrels or 50.44% from last year's imports of only 78.7 million barrels. Crude oil imports in 2021 are also much higher than imports in 2019 which amounted to 86.9 million barrels.

    This strategy can also reduce the trade balance deficit. This is because the price of imports is lower than the price of Indonesia's oil exports. The average purchase of crude oil imports this year is US$ 57.8 per barrel, while Indonesia's average oil exports reach US$ 59.8 per barrel. She estimates that there will still be a surplus of US$ 75 million.

Investor Daily, Page-10, Tuesday, July 13, 2021

Pertamina Shipping is Targeted to Succeed in ASEAN

 

    One of the government's big agendas is to strengthen the logistics system. To strengthen Indonesia's domestic logistics system that can be seen at the global level is to develop State-Owned Enterprises (SOE/BUMN) in the shipping and logistics sectors. 

PT Pertamina (Persero)

    Through the sub-holding of PT Pertamina (Persero), namely PT Pertamina International Shipping (PIS), the government is trying to revive the world of shipping and logistics. PIS targets to become a global integrated logistic and marine solution company.

"PIS is expected to become an integrated and marine logistics solution company that is respected in the ASEAN (Southeast Asia) region," said Deputy Minister of BUMN I Pahala Mansury.

    Pahala said Pertamina had the strength in this matter because currently PIS had a large number of ships and had very reliable specifications. The government is targeting PIS to have a stronger infrastructure in Southeast Asia. 

    Pahala said that the government has an agenda to find investors to strengthen the PIS business in the future. He said the efforts that would be made were for example to cooperate with the Indonesia Investment Authority (INA) or other strategic partners.

"The government is targeting cooperation with INA or other strategic partners that can be obtained through INA and after that, the company will conduct an initial public offering (IPO)," said Pahala.

    After sailing since 9 February 2021 from JMU Ariake Shipyard, Japan, PIS's giant container ship or Very Large Crude Carrier (VLCC) has arrived in Indonesia and is ready to support the distribution of national energy supplies. This readiness was marked by the inauguration of BUMN Minister Erick Thohir on a ship that was berthed in Semangka Bay, Kota Agung, Tanggamus Regency, Lampung.

Erick Thohir

    Erick conveyed his appreciation for Pertamina's efforts in transforming and presenting value creation so that it could become a global company. He ensured that the government fully supports PIS's steps to become an integrated logistics and marine solution company that plays at the global level.

"Pertamina must return to its heyday in the 70s, become a global player and be ready to compete based on good corporate governance," said Erick.

Nicke Widyawati

    Pertamina President Director Nicke Widyawati said the investment made by presenting two ships, namely Pertamina Pride and Pertamina Prime, is in line with shareholders' directions to go global. Nicke explained that the two ships would serve foreign markets and transport crude from Aramco to Indonesia.

Saudi Aramco

"With our own ships, we have more flexibility because Pertamina has foreign reserves and production of 110 thousand barrels per day," said Nicke.

    PIS President Director Erry Widiastono explained that PIS continues to strive to meet energy needs by continuously creating various innovations as a consumer-oriented shipping company. One of them is presenting the giant tanker VLCC PERTAMINA PRIDE with a capacity of 2 million barrels and has been built at the Japan Marine United (JMU) Shipyard since 2018.

"The PERTAMINA PRIDE VLCC aims to simplify the flow of energy distribution and secure the supply of captive crude needs to Pertamina's refineries on a FOB Ras Tanura-Cilacap basis more efficiently so that it is ready to become the lifeblood of energy distribution for the country," said Ery.

Republika, Page-16, Monday, April 19, 2021

Aramco Trading Honors Nicke Widyawati Top CEO 2020

 

The Aramco Trading, a global energy company based in Saudi Arabia, named Pertamina President Director Nicke Widyawati as Top CEO 2020. In this award titled The Aramco Trading New Silk Road CEO of the Year in 2020, Nicke Widyawati was named the best CEO for the Energy Refining category.

Nicke Widyawati

Nicke's crowning as Top CEO 2020 is based on the assessment and performance of Nicke who has outstanding achievements in the national oil and gas processing industry at the time of the Covid-19 challenges that hit the world. Nicke is also considered to have an outstanding record in building the progress of the oil and gas industry and interconnecting energy from the Middle East to Asia.

Nicke Widyawati revealed that this award was the result of the hard work of all Pertamina employees. This year, Pertamina experienced triple shocks as a result of the Covid-19 pandemic, namely, the world crude oil price dropped dramatically, decreased demand for fuel oil, and depreciated the rupiah exchange rate against the dollar. However, all Pertamina's business lines will continue to meet the 2020 target.

“Our aspiration is to become a leading global energy company with a market value of US $ 100 billion. The existing refineries and development programs are our commitment to fulfill the tasks mandated by the Government and focus on encouraging the development of refineries that are integrated with petrochemicals, "said Nicke Widyawati.

According to Nicke Widyawati, Pertamina also focuses on developing green refineries and new and renewable energy in order to fully implement the environmental, social, and government framework (ESG Framework). This step is taken so that Pertamina is more agile, adaptive, and sustainable in facing the challenges of the energy transition era which is in line with Pertamina's vision to become a world-class oil and gas company with a market value of US $ 100 billion.

"Within the framework of developing renewable energy, Pertamina will continue to optimize the use of domestic energy sources. The construction of the RDMP (Refinery Development Master Plan) and NGRR (New Grass Root Refinery) megaprojects continues to be completed to achieve national energy independence and sovereignty, "said Nicke Widyawati.

Investor Daily, Page-10, Friday, Jan 15, 2021

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.

Refinery Projects will remain in demand

The government is still optimistic that the oil and gas refinery project will still be attractive to foreign investors, even though a number of partners who have previously joined chose to resign due to the fluctuating pressure on the black gold price.

Overseas Oil and Gas LLC

One of the partners who have resigned is Overseas Oil and Gas LLC based in Oman, from the Bontang Refinery project in East Kalimantan Province, so that the project is currently suspended. In addition, Saudi Aramco has also recently withdrawn from the Cilacap Refinery project in Central Java Province.

Saudi Aramco

Deputy for Maritime Sovereignty and Energy Coordinating Ministry of Maritime and Investment Coordinating Ministry Yudhi Sadewa said he would investigate the withdrawal of Pertamina's partners in the Bontang Refinery project.

He acknowledged that low oil prices would make several countries withhold investment in advance. However, that does not mean that no one is interested in investing in a national refinery project. As an illustration, over the past year, the price of Indonesian crude oil (ICP) reached its lowest point in April 2020 at the US $ 20.66 per barrel and in May 2020 at the level of US $ 25.67 per barrel. Last year, the average ICP was the US $ 62.37 per barrel.

Purbaya revealed that Chinese investors were also interested in the refinery project in Batam, Riau Islands (Riau Islands).

"China will invest the US $ 5 billion to the US $ 6 billion in Batam. The Riau Islands ask for our support to support the investment, "he said.

However, he was unable to provide details on the capacity of China's investment plans in Batam.

"They say they can also go to the international market, therefore the choice is in the Riau Islands near the international shipping lane," he explained.

Purbaya is still optimistic that refinery investment will continue if it is properly guarded. He added that Abu Dhabi was also interested in building refineries in Balongan, West Java Province, and Dumai, Riau Province.

"Refinery investment has very large prospects," Purbaya said.

Previously, PT Pertamina (Persero) 's Megaprocessing and Petrochemical Processing Director Ignatius Tallulembang said that all Refinery Development Master Plan (RDMP) and Grass Root Refinery (GRR / new refinery) projects were still in the status of National Strategic Projects (PSN).

He added until now the entire refinery project construction process is still in accordance with the target. The breakdown includes, among others, Balongan Refinery which works in three phases, in phase 1 it has now entered the procurement auction process and is targeted to be onstream in 2022.

While for phase 2 studies are being carried out to increase its capacity which will be completed in September or October 2020 which will be followed by engineering studies.

CPC Corporation, Taiwan

For phase 3, Ignatius said, it was just agreed to cooperate with CPC partners from Taiwan related to petrochemical processing which would later integrate with existing refineries. Phase 3 is targeted for completion in 2026. Furthermore, at the Cilacap Refinery in Central Java, Pertamina is looking for new partners after Saudi Aramco decided to withdraw from cooperation in developing the refinery.

Double Impact

Ignatius asserted, although it requires a large investment, the refinery development can have multiple impacts on the economy. With a total investment of around US $ 48 billion if the project is completed, the refinery, which currently has a capacity of 1 million barrels per day, will increase to 2 million barrels per day so that fuel oil needs can be fulfilled without the need for imports.

Fahmy Radhi

     Gadjah Mada University's School of Energy Economics Fahmy Radhi believes the refinery business has a sustainable market certainty even though it requires a large investment fund with a long-term return on investment with a small return.

"I predict in early 2021, foreign investors will flock to Indonesia to invest in oil refineries," he said.

Fahmy believes that Pertamina must have a commitment that oil refineries are needed right now, so it needs a meeting to benefit both parties in the negotiation process. In addition, the government must provide a number of fiscal incentives and facilities in the process of land acquisition needed for refinery development.

Bisnis Indonesia, Page-14, Wednesday, June 10, 2020.

Pertamina-Aramco Officially Split

Pertamina is more focused on the construction or development of existing refineries. PT Pertamina (Persero) officially parted ways with Saudi Aramco in developing the Cilacap Refinery Development Master Plan (RDMP) mega-project. This decision was taken after Aramco sent a letter of resignation from the project.

Saudi Aramco

Pertamina Megaprocessing and Petrochemicals Director Ignatius Tallulembang said Saudi Aramco had resigned from the project after an agreement to review the cooperation ended in April 2020.

Nicke Widyawati

Ignatius conveyed, Aramco through his leadership sent a Letter to Pertamina's Managing Director Nicke Widyawati who informed Pertamina to proceed with the project without the oil company from Saudi Arabia. This is because Aramco is still focused on other things.

"They asked Pertamina to continue, meaning Aramco could not join the Cilacap Refinery construction. So, for the Cilacap Refinery no longer plans to work with Aramco," Ignatius said in a virtual conference.

Ignatius explained, Pertamina also continued to develop the Cilacap Refinery development project as well as looking for new partners to develop the project.

"Pertamina is in the process of finding a new partner, the land has been dealt while looking for opportunities that exist," Ignatius said.

Pertamina-Aramco Split alias Ambyar

In addition, after the withdrawal of Saudi Aramco there were plans to accelerate building a bio refinery or green refinery in the Cilacap Refinery. Ignatius said, the possibility for a bio refinery could be built faster and could operate in 2022 for a small scale.

Through the Cilacap Refinery development project, the original refinery capacity of 348 thousand barrels will increase to 370 thousand barrels per day (BPD). In addition, there will also be an increase in gasoline (gasoline) production from 59 thousand BPD to 138 thousand BPD and diesel production from 82 thousand BPD to 137 thousand BPD. Officially parting with Aramco, Ignatius said, Pertamina is now looking for new partners while developing the Cilacap Refinery independently.

"Pertamina is currently in the process of finding a new partner while looking for opportunities that we can build first. Then, prepare a business scheme by learning from the case of the Saudi Aramco partnership or other further cooperation," he said.

Overseas Oil and Gas LLC (OOG)

Pertamina had also previously been left by a partner in building a refinery. The State-Owned Enterprises (BUMN) in the oil and gas sector were left by Overseas Oil and Gas LLC (OOG), an oil and gas company originating from the state of Oman in the construction of the Bontang Refinery. 

    Without OOG, Pertamina has been forced to delay the construction of the Bontang Refinery. Ignatius explained, Pertamina would focus more on the construction or development of existing refineries as well as work on projects that had already prepared physical activities.

The previous Bontang refinery was part of Pertamina's six megaprojects consisting of four existing refinery developments, namely RDMP and two new refineries, Tuban and Bontang Grass Root Refinery (GRR). Ignatius emphasized that, despite being expensive, the construction of Pertamina's refineries had a multiplier effect on employment and national economic development.

RDMP and GRR also provide opportunities to improve the quality of fuel products (BBM) that are more environmentally friendly in accordance with international regulations and standards so that in the future a healthier Indonesian ecosystem will be realized.

Of the six refinery projects that were previously expected to be completed by Pertamina in 2022, only two refinery projects will be completed. First, Balongan Refinery in Indramayu, West Java, the first and second phases. Second, the Bio-Refinery in the Cilacap refinery in Central Java. He explained, the two projects to date have shown enormous progress.

Nicke Widyawati

Pertamina's President Director Nicke Widyawati said the schedule for the Cilacap Refinery development project which is a national strategic program or PSN will be reviewed and reviewed by Pertamina. 

Erick Tohir

   Previously, SOE Minister Erick Tohir warned that Aramco's negotiations with Pertamina regarding the valuation of the Cilacap Refinery should not be detrimental to the state. He said, bargaining is a natural thing, but don't let the Aramco and Pertamina negotiations harm the country.

Republika, Page-4, Saturay, June 6, 2020

Pertamina is looking for new partners in the Cilacap Refinery Project

PT Pertamina (Persero) is looking for new partners to develop the Cilacap Refinery upgrading and capacity building project. This is after the project economics agreement was not reached with Saudi Aramco, which has had cooperation with Pertamina since 2016.

Fajriyah Usman

     Pertamina Corporate Communication Vice President Fajriyah Usman said Pertamina did not become a partner with Saudi Aramco in building the Cilacap Refinery Project because there was no agreement. Therefore, for the time being, he will work on this project independently while exploring other strategic partners.

"The assessment of [new strategic partners] is underway. However, we cannot convey [the candidates], "said Fajriyah Usman.

Fajriyah Usman explained, Pertamina and Saudi Aramco did not agree on the economic price of the Cilacap Refinery Project. Pertamina offers a rental scheme for the project, the same as the scheme used by the company in Balikpapan Refinery. Under this scheme, Pertamina will pay the rental fees for the joint venture with Saudi Aramco which is building a new refinery unit at the Cilacap Refinery Complex.

"Not agreeing about economic prices which may make calculations not right at this time, when oil and gas conditions are down," Fajriyah explained.

Previously, with the initial scheme, Pertamina and Saudi Aramco also did not immediately reach an agreement related to the valuation of the Cilacap Refinery which caused the project to be delayed.

Nicke Widyawati

Pertamina President Director Nicke Widyawati briefly explained, the difference between the valuations calculated by Pertamina and Saudi Aramco is still very large. The Saudi Aramco count is very low, while Pertamina has a book value as a minimum limit to spin off assets.

Pertamina appointed Saudi Aramco as a partner in 2014. After two years, both of them signed a joint venture development agreement (JVDA) agreement in December 2016. This agreement became the basis for both of them forming a joint venture that will work on the Cilacap Refinery Project.

This JVDA should end in December 2018 but then be extended by six months until June 2019. Then the JVDA will be extended to September, then extended for the third time until October, and lastly extended until December 2019. This agreement is then extended until the first quarter of 2020 but again extended until the end of April.

The Cilacap refinery is targeted to start operating in 2025. After upgrading, the crude oil processing capacity of the Cilacap Refinery will increase from 348 thousand barrels per day (BPD) to 370 thousand BPD. Furthermore, there will be additional production of gasoline (gasoline) 80 thousand BPD, diesel 60 thousand BPD, and aviation fuel of 40 thousand BPD. Fuel production increased significantly because the ability of refineries to process crude oil into finished products (NCI) rose from 74% to 92-98%.

On Target

Meanwhile, Pertamina said that the construction of the Balikpapan Refinery Project has now reached 16.32%, ahead of the last quarter of this year which recorded 15.02%. The details, until May 17, engineering activities have reached 6.05%, procurement 5.85%, construction 4.38%, and commissioning 0.03%.

"The development of this project is still in accordance with the plan, although in the process it must implement strict health protocols," said Fajriyah.

The Balikpapan Refinery Project will increase refinery processing capacity from 260 thousand BPD to 360 thousand BPD and improve the quality of fuel products from Euro II equivalent to Euro V. The Balikpapan Refinery Project is also synergized with the construction of the New Crude Lawe-Lawe Tankage Facility with a storage capacity of 2 million barrel.

Fajriyah asserted Pertamina remained committed to completing all national strategic projects including the Cilacap and Balikpapan Refinery Projects. Pertamina will maximize and optimize the completion of the refinery development master plan (RDMP) and construction of a new refinery (grass root refinery / GRR) so that it can be completed according to the specified time target.

"The RDMP and GRR megaprojects are national strategic projects that have been set to continue during the co-19 pandemic and fluctuations in crude oil prices and the rupiah exchange rate against the dollar. This project is important to ensure that national energy security and independence can be realized immediately, "said Fajriyah.

The entire refinery project is targeted to be completed in 2026. He added, if the project is completed, the refinery's total capacity, which at the moment of 1 million barrels per day (BPD), will increase to 2 million BPD so that fuel needs can be met without the need for imports.

"Hopefully, in 2026, we will be independent by no longer importing BBM," said Fajriyah Usman.

Investor Daily, Page-9, Saturday, May 30, 2020