Indonesia govt considers cooperation between Pertamina and Rosneft “very important”

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Photo by The Insider Stories

JAKARTA (TheInsiderStories) – After long period of discussions and negotiations, Indonesia’s state energy company PT Pertamina and its Russia’s counterpart Rosneft signed an agreement to build an integrated oil refinery in Tuban, East Java which is estimated to cost around US$12-13 billion. The Indonesian government considers the agreement as “very important”.

“This cooperation between Pertamina and Rosneft is very important, not only in term of the value of investment, but also the project combines oil refinery and petrochemical plants,” Coordinating Minister for the Economic Affairs Darmin Nasution said at the signing ceremony.

The development of the integrated plant — refinery and petrochemical — will provide strong base for the country’s manufacturing sector as well. He argues that anytime Indonesia’s economy recorded growth of 7 percent, it always threats the growth to be overheating. A high growth always follows with higher imports as domestic supply needed by industries, in particular three key sectors — petrochemical, steel and metal and basic general chemical products —  were not available.

Therefore, Minister Darmin welcome the cooperation between Pertamina and Rosneft.

Last week, in South Korea, Krakatau Steel, Indonesia’s state owned steel maker, signed cooperation agreement with Posco of SOuth Korea to develop steel and metal plants.

In addition, Darmin also said the cooperation by the two companies is also important as it will pave ways for further cooperation in developing upstream oil and gas business in order to improve Indonesia’s energy security.

Framework Agreement

Pertamina and Russia’s oil & gas producer OJSC Rosneft Oil Company signed the framework agreement on Thursday on green field Tuban Refinery project in East Java. The project, with a refining capacity of 300,000 bpd–45% produce gasoline, 35% diesel and 20% feed for petrochemical–is estimated to require an investment of around $13 billion.

The signing of agreement between Vice President of Rosneft Didier Casimiro and Pertamina’s director Rachmad Herdadi witnesses by Russia’s Ambassador Michael Galuzin, Coordinating Minister for Economic Affairs Darmin Nasution, State Own Enterprises Minister Rini Soemarno and Directorate General for Oil & Gas for Energy and Mineral Resources I Gusti Nyoman Wiraatmadja Puja.

CEO of Pertamina Dwi Sutjipto said, the company will own at least 55 percent at the joint venture company that has set up to build the refinery while Rosneft the rest of it. Pertamina expects can produce 35,000 bpd from Russia’s block and now the company in the process to seeks the block at the country.

Didier added, for Rosneft the agreement with Pertamina become the key development for the company. He continued, both sides discussed the prospects for joint projects in crude and product supplies, logistics and infrastructure.

“There is also potential for Pertamina to step in as a shareholder in Rosneft’s upstream projects in Russia,” he stated, adding that Rosneft is keen on creation of a regional energy hub in Indonesia.

Indonesia, with a population of 254 million people, is the largest Asian-Pacific net importer of vehicle fuels and petrochemicals. Petroleum products are supplied to Indonesia primarily from South Korea and Singapore.

It is crucial for Rosneft to arrange direct shipments of hydrocarbons, which will increase the economic efficiency of oil refining in Indonesia. Currently Rosneft produces 5.2 million barrels of oil per day and 50 per cent of the output is processed in its owned refineries.

The company also build refinery in Germany, Italy, Belarus, and participating in Zanjin in China. Rosnefr has lift the refinery facility to full transition Euro-5 motor fuels production for European market.

Recently, Pertamina and global oil & gas players Saudi Aramco signed an agreement to build the upgrading project of Refinery Unit IV Cilacap with an estimated cost of $5.5 billion. The project is targeted to be completed and operational in 2022. (*)

 

 

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Source: The Insiderstories
Indonesia govt considers cooperation between Pertamina and Rosneft “very important”

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