Indonesia’s state-owned energy company PT Pertamina and Saudi Aramco have signed an agreement to upgrade the Cilacap Refinery located in Central Java with an investment of $5.5bn.
Under the agreement, the companies will formalise key business principles for joint ownership, operation and modernisation of the refinery.
The project is expected to be completed by 2021.
Saudi Aramco president and CEO Amin Nasser said: “Indonesia is a rising powerhouse in the global economy, and has long deep rooted trade and cultural ties with Saudi Arabia.
“It’s refining sector has enormous potential, and with Indonesia’s fast-growing demand for refined products, Saudi Aramco’s role in Cilacap can help fuel this country’s coming era of development and prosperity”
The proposed Cilacap Refinery upgrade is part of Pertamina’s refinery development master plan (RDMP) and will enable it to process more sour crudes and produce basic petrochemicals and lubricant base oils.
As part of the upgrade, the capacity would be expanded to 370,000 barrels per day (BPD) from 348,000 bpd,helping Indonesia meet its increasing demand of refined products, lubricant base oils as well as petrochemicals.
The agreement also includes supply of Arabian crudes to Cilacap refinery and will pave the way for the next phase of development within the scope of collaboration between the companies.
Pertamina and Saudi Aramco plan to commence the basic engineering design study for the Cilacap refinery upgrade soon, which will be completed by 2016.
The company has completed a Residual Fluid Catalytic Cracking (RFCC) facility and started work on the Blue Sky project, both of which will produce higher quality gasoline.
Pertamina offered Saudi Aramco and other strategic partners an opportunity to participate in its RDMP in July 2014 to upgrade and expand the Cilacap; Balongan; Dumai; Plaju; and Balikpapan refineries from 820 MBD of aggregate processing capacity to 1,680 MBD.
The company selected Saudi Aramco as a strategic partner for the Cilacap and Balongan refineries in Java; and Dumai refinery in Sumatra.