Indonesia's state-owned oil and gas company Pertamina has signed a heads of agreement for a $5.5 billion upgrade of the Cilacap refinery with Saudi Aramco, president director Dwi Soetjipto said in a statement Thursday.
The project is expected to be on stream in 2021, he added.
The upgrade will hike the capacity of the crude distillation unit to 370,000 b/d and the refinery's complexity index will also increase from 3 to 9, he said.
After the upgrade, the refinery will be able to process sour crude with a sulfur content of up to 2%. Currently it can only process crude oil with a sulfur content of 0.2-0.3%.
The project includes a hike in the capacity of the residual fluid catalytic cracker from 62,000 b/d to 81,000 b/d and the installation of a new 43,000 b/d hydrocracker as well as a petrochemical unit that will hike paraxylene production from 280,000 b/d to 485,000 b/d.
The upgrade will also increase Cilacap's polypropylene output, Soetjipto said.
Pertamina and Saudi Aramco plan to carry out site preparation next year and complete front end engineering and design by 2017 so that engineering, procurement and construction can be started in 2018 and the project come on stream in 2021, he added.
Cilacap is Pertamina's biggest refinery with a capacity of 348,000 b/d.
Pertamina expects to have a 55% stake in the JV. Saudi Aramco will supply 70% of the crude oil, but the JV would look at acquiring cheaper crudes. Pertamina plans to sell the oil products domestically, Platts reported earlier.
Pertamina has signed three memorandum of understandings in 2014 with Saudi Aramco, China's Sinopec and Japan's JX Nippon Oil and Energy to assess the feasibility of upgrading five refineries across Indonesia.
Meanwhile Pertamina has appointed the consortium led by Japan's JGC as EPC contractor for the $392 million Blue Sky project at Cilacap refinery that will double its capacity to produce 92 RON gasoline to 91,000 b/d, Soetjipto said.
The Blue Sky project is expected to be completed in the next 34 months.
