Pertamina and Saudi Aramco to collaborate on refinery expansion
Indonesia's state-owned PT Pertamina and Saudi Aramco, the state-owned oil company of Saudi Arabia, have signed a Heads of Agreement (HoA) to formalise key business principles for joint ownership, operation and upgrade of the Cilacap Refinery.
The contract was signed during the inauguration of the newly commissioned Residual Fluid Catalytic Cracking (RFCC) facility at the Cilacap Refinery, and the kick off of the Blue Sky project, both of which are designed to produce higher quality petrol.
The proposed Cilacap Refinery upgrade will enable the refinery to process more sour crudes, meet high quality product specifications (Euro IV) and produce basic petrochemicals and lubricant base oils.
The capacity expansion to 370 mbd will help Indonesia meet its increasing demand of refined products, lubricant base oils and petrochemicals.
The agreement includes a long-term supply agreement for Arabian crudes to Cilacap refinery.
This HoA will pave the way for the next phase of development within the scope of collaboration between the two parties.
The basic engineering design study for the Cilacap refinery upgrade is expected to commence soon and be completed by 2016.
Pertamina’s Refinery Development Master Plan (RDMP) is part of the company’s mission as a national energy company to produce and market fuel products for Indonesia.
The RDMP will increase the competitiveness of Indonesia’s refineries while increasing domestic supply security.
Participation in the RDMP will offer Saudi Aramco a major growth component of its global downstream expansion portfolio aspiration.
The investment would take place within a high growth petroleum demand in South East Asia which has been earmarked in the company’s downstream strategy.
In July 2014 Pertamina offered Saudi Aramco and other strategic partners the opportunity to participate in its RDMP to upgrade and expand five existing domestic refineries (Cilacap; Balongan; Dumai; Plaju; and Balikpapan) from 820 mbd of aggregate processing capacity to 1,680 mbd.
Saudi Aramco was selected by Pertamina as a strategic partner for three of the five refineries.
Saudi Aramco signed a MOU on 10 December, 2014, giving the company exclusivity to conduct a feasibility study jointly with Pertamina for the three refinery expansions and negotiate key business principles.