MOSCOW (MRC) -- PT Pertamina, Indonesia’s state energy company, and Russia’s Rosneft OAO signed a cooperation agreement that includes a plan to build a new oil refinery in the Southeast Asian nation, the companies said Thursday, reported Bloomberg.
Pertamina, which hasn’t built a new refinery since 1997, will be the majority shareholder in the facility at Tuban, East Java, it said earlier this month. The two companies may invest USD12 billion to USD13 billion in the refinery project which includes a petrochemical unit, Dwi Soetjipto, president director of Pertamina, told a press conference after signing the accord.
Completion of the Tuban refinery is targeted by the end of 2021, the companies said in a statement. Capital expenditure will be based on the feasibility study and on engineering designs, they said. As part of the deal, Rosneft has offered to share proprietary data and exclusive rights to assess partnership opportunities in upstream oil and gas assets in Russia, they said.
Aging refineries and declining domestic production have turned Indonesia, a member of the Organization of Petroleum Exporting Countries, into a net oil importer. Expansion of refining capacity, including the construction of new plants, is part of a broader strategy by President Joko Widodo to overhaul the energy industry and reduce costly imports.
The Indonesian company may take a minimum stake of 55 percent in the new refinery project, according to Soetjipto. The refinery will have the capacity to process 300,000 barrels of crude a day, Rahmat Hardadi, Pertamina’s refining director, told the press conference. The plant may produce as much as 35 percent diesel oil, 45 percent gasoline and 15 percent to 20 percent feedstock for petrochemicals, Hardadi said.
Pertamina is hoping to get additional production of 35,000 barrels of oil a day and a reserve of 200 million barrels from acquiring interests in several oil fields in Russia, Soetjipto said. The company is reviewing two assets there and targets an interest of 10 percent to 15 percent in each asset, he said.
As MRC informed earlier, in 2013, Pertamina signed an agreement to purchase petrochemical products from PTT Global Chemical. The agreement serves as a pre-marketing strategy for Pertamina and PTT’s joint Indonesian petrochemical business. Under the agreement, PTT will deliver at least 5,000 tonnes of polyethylene and polypropylene products each month to Pertamina for sale in Indonesia.
Pertamina is an Indonesian state-owned oil and natural gas corporation based in Jakarta. It was created in August 1968 by the merger of Pertamin (established 1961) and Permina (established 1957). Pertamina is the world's largest producer and exporter of liquefied natural gas (LNG).
Rosneft became Russia's largest publicly traded oil company in March 2013 after the USD55 billion takeover of TNK-BP, which was Russia’s third-largest oil producer at the time.
MRC