Saudi Aramco is ready to supply 70 Percent of Cilacap Refinery's Needs

KATADATA - PT Pertamina (Persero) said that the agreement with Saudi Aramco to form a joint venture would be signed by both sides on November 26^th 2015. The joint venture will manage the revitalization project for Cilacap Refinery. 

Pertamina is decided to own 55 percent of the joint venture, while Saudi Aramco is to own the remaining. Even though the ownership is smaller than Pertamina, Saudi Aramco has committed to supply 70 percent of Cilacap Refinery’s crude oil needs.

The investment value of Cilacap Refinery reaches US$ 6 billion, or IDR 82.5 trillion. In order for Pertamina to get 55 percent of share ownership, the state-owned firm must at least spend US$ 3.3billion. Right now, Pertamina is still evaluating the value of Cilacap Refinery. If the value of the refinery is less than US$ 3.3 billion, then Pertamina need to add more money to cover the 55 percent of stake. But if the refinery’s value reaches the number, then Pertamina would not need to spend any more money. 

The supply from Aramco is very much needed, considering that after the revitalization, Cilacap Refinery’s production capacity will increase from 348,000 barrels per day (bpd) to become 460,000 bpd. The needs for crude oil are increasing, while the production of crude oil within the country is decreasing. This is also the very reason why Pertamina felt the need to revitalize its refineries. Another reason is to cut the import of fuel and save the money.

Pertamina’s refining director Rachmad Hardadi said that by revitalizing the refinery, Cilacap Refinery will be able to refine a lower and cheaper crude oil, like the one called sour oil that has a high level of sulfur.

“Indonesian oil is the second most expensive one in the whole world. And later on it will be mixed with sour oil,” Rachmad said. Even though part of the crude oil used is lower in quality, the refinery will focus to produce fuel with octane level (RON) at 92 and above.

The production from Cilacap Refinery will be taken by Pertamina to fulfill the domestic needs. Saudi Aramco has also agreed that the joint venture will only focus on the upstream sector instead of also joining in the downstream distribution sector.