Indonesia's state-owned oil and gas company Pertamina expects to sign the final agreement with Saudi Aramco on the $5.5 billion Cilacap refinery upgrade and expansion project in December this year, a senior official said late Thursday.
However, Pertamina expects the signing could be advanced to October or November, in a bid to allow the project to come on stream sooner.
"We agreed [to sign the agreement] in December 2016, but if it can be accelerated [to October or November], it will be better," Pertamina's president director Dwi Soetjipto said.
Pertamina and Aramco had signed a heads of agreement in November 2015.
The project, that will increase the capacity of the 348,000 b/d Cilacap refinery in central Java to 370,000 b/d, is expected to be completed in 2021.
Under the plan, Pertamina and Aramco will create a joint venture company to carry out the project.
Pertamina expects to have a 55% stake in the joint venture.
While Aramco has offered to supply 70% of crude oil to the refinery, the joint venture is allowed to look at other crude oil sources that are considered cheaper.
Refined products from the upgraded refinery will be sold domestically, S&P Global Platts reported previously.
When asked whether Aramco is willing to lower its potential shareholding in the refinery project, Soetjipto said, "There is no official statement about the agreement that will be signed."
Previously, Indonesia's acting energy and mines minister Luhut Panjaitan said Aramco is willing to lower its potential share in the Cilacap refinery to 30%, from 45%.
The Cilacap project also includes revamping and expanding the capacity of the 62,000 b/d residue fluid catalytic cracker to 81,000 b/d, building a new 43,000 b/d hydrocracker, as well as expand the paraxylene production capacity to 485,000 mt/year from 280,000 mt/year, and raise polypropylene output to 153,000 mt/year.
DUMAI AND BALONGAN UPGRADE PROJECTS
Meanwhile, Pertamina has also questioned Aramco on the upgrade projects at its 170,000 b/d Dumai and 125,000 b/d Balongan refineries. If Aramco is not willing to do the job, Pertamina will find other partners to carry out the projects, Soetjipto said. "Pertamina will speed up construction of the Balongan and Dumai projects. We will start at the end of this year, and expect the revamp projects to be completed in 2023-2025 so Indonesia will no longer import [refined oil products]," said Pertamina's processing director Rachmad Hardadi Friday.
Under a memorandum of understanding signed in December 2014, Aramco was to help Pertamina with the upgrade of the Cilacap, Dumai and Balongan refineries.
H1 2016 CRUDE AND CONDENSATE OUTPUT RISES 11.3% ON YEAR
In the first half of 2016, Pertamina produced 305,000 b/d of crude and condensate, up 11.3% year on year, Soetjipto said.
Its gas production reached 1.938 Bcf/day, up 21% year on year, he said.
The company's crude and condensate production for 2016 is estimated to rise to 313,000 b/d, up 12.6% compared with last year's realized output of 278,000 b/d. Gas production for 2016 is forecast to increase to 1.99 Bcf/d, up 4.7% from 1.9 Bcf/d last year, Platts has reported.
The company's net profit surged 221% year on year in H1 2016 to $1.83 billion, Soetjipto said. "We increased our performance and efficiency in all sectors and tried to value add from upstream to downstream," he added.
But the company's revenue fell 21% year on year to $17.2 billion in first-half 2016. Pertamina's operating profit in H1 reached $3.28 billion, up 110% year on year, Soetjipto said.
