Pertamina pursues Cilacap refinery plans without Aramco

Indonesia's state-owned oil firm Pertamina will upgrade and expand its 348,000 b/d Cilacap refinery on its own, indicating that a delayed joint development with Saudi Arabia's state-controlled Saudi Aramco has fallen through.

Pertamina made no mention of Aramco as it yesterday reaffirmed that the Cilacap development in central Java with go ahead. The Indonesian firm said it "will continue to independently develop" the project "while in parallel there will be another strategic partner search". Cilacap will be expanded to 370,000 b/d, with gasoline output increased from 59,000 b/d to 138,000 b/d and diesel production lifted from 82,000 b/d to 137,000 b/d.

Pertamina was aiming last month to finalise the delayed venture with Aramco to lift capacity at Cilacap to 400,000 b/d, along with adding a hydrocracker to turn residual fuels into gasoline and diesel. Under the $6bn project, first announced in March 2017, Pertamina would own a 55pc stake in the joint venture and Aramco 45pc. Aramco had the right to supply as much as 70pc of the crude supplying Cilacap.

Cilacap mirrors similar delays of projects to increase capacity at new and existing Indonesian refineries, which have been plagued by drawn-out negotiations, community opposition and Pertamina's financial difficulties. Pertamina has made minimal progress on much of its partnerships with foreign investors forged in the wake of the election of Indonesian President Joko Widodo in 2014 and his drive to overhaul the energy sector and boost infrastructure in the country.

Pertamina said yesterday it was still committed to expanding national refining capacity by 2mn b/d as part of a wider target to eliminate its oil product imports by 2026. It is already Asia-Pacific's largest gasoline importer at 350,000 b/d.

The failure of the Cilacap venture also deals a blow to Aramco's downstream ambitions in Asia-Pacific, which is the biggest market for its crude. The Saudi company bought a 50pc stake in Malaysia's 300,000 b/d Pengerang refinery with state-owned Petronas in 2017. But its other Asian refining ventures — including a new 300,000 b/d integrated refining and petrochemical complex in northeast China's Liaoning province, a 1.2mn b/d refinery on India's west coast and a potential 300,000 b/d complex at Pakistan's deepwater port of Gwadar — are only at the preliminary stage.

source: Argus Media