Aramco, Pertamina in JV development agreementby Martin Menachery on Dec 26, 2016
Saudi Aramco recently signed a joint venture development agreement with PT Pertamina, marking a key milestone to enable further progress to jointly own, upgrade and operate the Cilacap Refinery in central Java, Indonesia.
Both companies signed a heads of agreement in November 2015, and the latest joint venture development agreement will allow for the next development phase of the project to move forward.
“Indonesia’s growth trajectory is truly remarkable with an ambitious economic agenda underscored by the government’s reforms to increase investments in the infrastructure and energy sectors,” Amin Nasser said. “Through an outlay of significant capital investments and the reliable supply of competitive feedstock, today’s agreement with Pertamina enables Saudi Aramco to potentially play a bigger role in meeting the rising energy needs of one of the world’s fastest developing economies,” he added.
“The agreement is representing both companies’ strong commitment in developing and strengthening the energy infrastructure throughout the country, especially in refinery projects, that align Pertamina’s five strategic pillars. Upgrading and expansion of Cilacap Refinery will help Pertamina to enhance its downstream competitiveness with higher valuable and environmental friendly products,” Dwi Soetjipto said.
A part of Pertamina’s refinery development master plan, the Cilacap refinery’s capacity is planned for an expansion to 400,000 barrels per day and it is designed to process Arabian crude supplied by Saudi Aramco. The refinery will also produce refined products, which meet Euro V specifications, basic petrochemicals, and Group II base oil for lubricants.
The partnership between Pertamina and Saudi Aramco, apart from meeting rising fuel demand, will enhance the competitiveness of Indonesia’s refineries and contribute to improved energy security.
Pertamina will hold a 55 percent stake and Saudi Aramco will have the balance 45 percent in the ownership structure of the upgraded Cilacap refinery. The upgraded refinery configuration has been completed, to date, and the process to select technology licensors will start soon with the basic engineering design work targeted for completion in the first quarter of 2017. By this agreement, the way for the upgraded project to move to the front end engineering design phase in the second quarter 2017 is clear, while project start-up is targeted in 2021.