Pertamina lets contract for Balikpapan refinery upgrade

State-owned PT Pertamina has let a contract to Hyundai Engineering Co. Ltd. to provide engineering, procurement, and construction for Pertamina’s previously announced $3.9-billion Balikpapan Refining Development Master Plan (RDMP) project.

State-owned PT Pertamina has let a contract to Hyundai Engineering Co. Ltd. to provide engineering, procurement, and construction for Pertamina’s previously announced $3.9-billion Balikpapan Refining Development Master Plan (RDMP) project to upgrade and modernize its 260,000-b/sd refinery in Balikpapan, East Kalimantan, Indonesia (OGJ, Dec. 13, 2018).

As part of the $2.17-billion turnkey contract, Hyundai Engineering will deliver EPC services for the project for a duration of 53 months from the start of construction, the service provider said.

Alongside expanding the refinery’s crude processing capacity by 100,000 b/sd to 360,000 b/sd, the proposed overhaul also will include construction of units that will equip the refinery to produce fuels meeting Euro 5-quality standards, Hyundai Engineering said.

The Balikpapan RDMP project comes as part of the Pertamina’s broader 10-year, $30-billion plan to revitalize and expand operational capability of its Indonesian refineries by doubling existing overall processing capacity to 2 million b/d by 2026 to meet the country’s growing demand for cleaner petroleum-derived products and reduce its dependence on foreign imports (OGJ Online, Dec. 15, 2014; Oct. 7, 2013).

Revised phases

Previously due to be completed in 2021, Balikpapan’s RDMP Phase 1—which was to increase the refinery’s crude processing capacity to 360,000 b/sd from 260,000 b/sd as well as enable production of fuels that conform to Euro 2-quality specifications—was to be followed by RDMP Phase 2, which was designed to equip the refinery to produce Euro 5-standard fuels.

In 2017, Pertamina let contracts to Honeywell UOP LLC to provide technology licensing and engineering design both for a 33,000-b/d continuous catalyst regeneration unit as well as an expansion involving a 47,000-b/d hydrocracking unit as part of Balikpapan’s RDMP (OGJ Online, Feb. 2, 2017).

In 2016, the operator let a series of contracts to Axens SA and McDermott International Inc. (formerly CB&I) to provide technology licensing, design, and engineering on additional grassroots units to be added during the Balikpapan modernization (OGJ Online, Oct. 6, 2016; July 25, 2016).

RDMP overview

First announced in 2013, Pertamina’s refinery revitalization program’s RDMP specifically aims to upgrade the aging Balikpapan, 348,000-b/sd Cilacap, 170,000-b/sd Dumai, and 125,000-b/sd Balongan refineries to:

• Process heavier, less-expensive crudes with a 2% sulfur content than the lighter, sweet crudes (0.4% sulfur content) they were originally configured to process.

• Increase the overall Nelson Complexity Index factor of the operator’s refining system to 8.9 from its current 5.4.

• Increase operational processing capacity up to 1.4 times from existing capacity.

• Increase fuel production.

• Improve the volume and quality of fuel production to conform with Euro 4 and Euro 5 standards from current Euro 2-quality standards.

• Increase system-wide refinery profitability to $7.90/bbl from $3/bbl (OGJ Online, May 23, 2016).

While a specific timeframe for startup of the Dumai RDMP has yet to be revealed, Pertamina last confirmed the RDMP Balongan and Cilacap projects were due for commissioning in 2023.

New refineries

Alongside revitalization projects at its existing refineries, Pertamina also plans to build two grassroots integrated refining and petrochemical complexes, each of which will cost $15-16 billion to complete.

The first project, a joint venture with Russia’s PJSC Rosneft, to be built at Tuban, in East Java, would involve construction of a 300,000-b/sd refinery configured to process imported volumes Russian ESPO and Iraqi Basrah, as well as other medium to heavy, sulfurous crude imports to produce feedstock for an associated petrochemical complex, the partners said (OGJ Online, May 27, 2016).

The Tuban refinery and integrated petrochemical plant were previously scheduled to begin operation in 2024, though a revised timeframe has yet to be revealed.

Independently, Pertamina also plans construction of a 300,000-b/sd in Bontang, East Kalimantan, that also would be integrated with some type of still-yet-to-be-identified petrochemical operation.

Contact Robert Brelsford at rbrelsford@endeavorb2b.com.

More in Refining & Processing