Pertamina wins loan to expand Balongan refinery

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Jan. 12 -- A consortium of international banks has committed to provide Indonesia's state-owned PT Pertamina with $225 million financing, enabling it to build a polypropylene unit at its 125,000 b/d refinery in Balongan, West Java.

"The deal is for project financing," said Pertamina finance director Ferederick Siahaan, who added that Japan's Nippon Export & Investment Insurance (Nexi) would act as guarantor for the project.

In addition to Nexi, Ferederick said the consortium is comprised of a number of banks, including HSBC Holdings PLC, BNP Paribas SA, and Sumitomo Mitsui Banking Corp.

Pertamina last year announced plans to build the unit.

"The prospects for the polypropylene market are good," said Pertamina chief Ari Soemarno in May. "That is why we plan to build a polypropylene unit to meet domestic demand [for] plastic.

"We are seeking a partner," Ari said, adding that the new unit would turn Balongan's propylene into polypropylene to increase its value, while another company official said the plant would cost about $200 million and would have a production capacity of 200,000 tonnes/year.

In January 2008, Pertamina signed a contract with Japan's Toyo Engineering and Indonesia's Rekayasa Industri for an expansion project aimed at upgrading the refinery's residue catalyst cracking unit to switch from ethylene output to propylene.

Meanwhile, this month, officials expected the Balongan refinery, which has been shut since last October, to resume operations by Jan. 9. According to Pertamina Vice-Pres. Anang Rizkani Noor, "Everything is smooth and on schedule."

Pertamina shut the refinery on Oct. 18 to upgrade the RCC unit, and 10 days later, there was an explosion at the refinery's 58,000 b/d atmospheric hydrodemetalization unit. The refinery was restarted Dec. 17 but was shut again Dec. 21 due to what officials called "technical problems."

Contact Eric Watkins at hippalus@yahoo.com.

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