Indonesia to expand refineries' capabilities

Jan. 8, 2007
Indonesia's state-run PT Pertamina and Japan's Mitsui & Co. plan to establish a joint venture to build a $1 billion gasoline cracker at the Cilacap refinery on Java.

Eric Watkins
Senior Correspondent

LOS ANGELES, Jan. 8 -- Indonesia's state-run PT Pertamina and Japan's Mitsui & Co. plan to establish a joint venture to build a $1 billion gasoline cracker at the Cilacap refinery on Java.

Pertamina processing director Suroso Atmomartoyo said the new unit would have a capacity of 40,000-50,000 b/d. He said Pertamina plans to start construction by 2008 at the latest and expects operations to begin in 2010.

The Cilacap refinery has two crude distillation units with respective capacities of 118,000 b/d and 230,000 b/d. The facility also has a 29,000 b/d gasoline-making reforming unit and a 50,000 b/d visbreaker.

Last December Pertamina Pres. Ari Soemarno said Indonesia wanted to make the Cilicap refinery more economic and competitive as part of a general strategy to develop the country's refining capacity, especially after suffering gasoline shortages in mid-2005.

He said Pertamina aims to double the country's crude output to 300,000 b/d within 4 years and to modernize several of its biggest refineries, inviting overseas partners to join $18 billion of projects aimed at boosting crude oil production and fuel refining.

In addition to the Cilicap refinery development, Pertamina plans to build a cracker at its Balikpapan refinery, and it is conducting talks with SK Corp. of South Korea to expand capacity of the 125,000 b/d Dumai refinery on Sumatra Island to 160,000 b/d.

Indonesia imports a third of its oil-product requirements, as current refining capacity of some 1 million b/d is too low to meet demand growth. Last June, Soemarno said Pertamina needs $10.5 billion to revamp its refineries and build a new one in order to cut costly imports.

Contact Eric Watkins at [email protected].