JAKARTA – State oil and gas company PT Pertamina (Persero) won’t be too active and have little portion in the development of the Balongan Petrochemical Refinery. China Petroleum Corporation (CPC) Taiwan have more role in production, refining, and marketing.
Ignatius Tallulembang, director of mega projects and petrochemical at Pertamina, said the company’s strategy is to make petrochemical one of the focuses for its refinery development, following projections of higher need for the product in the future.
The appointment of CPC Taiwan is not without reason. CPC is known as a leading company in the international petrochemical industry, and their presence is expected to serve as a gateway for Pertamina to enter the global competition.
“They (CPC Taiwan) are a strong player in petrochemicals, quite strong. Their marketing is good,” Tallulembang said in Jakarta, recently.
Tallulembang said that in the petrochemical business, one must have its own marketing strategy. This is inseparable from consumers, and the business is slightly different from oil and gas. However, the market potential for petrochemical will grow in the future, and therefore gaining experience from partners becomes a very important strategy.
“So, we expect our partner to play an active role. Because the petrochemical trade needs special tricks. We need partners who are good in finances and marketing,” he said.
The cooperation between Pertamina and CPC Taiwan takes form in the construction of a naphtha cracker plant and a global-scale petrochemical downstream sector development unit in Indonesia.
The total investment to build the entire petrochemical refinery complex is estimated to reach US$6.5 billion. Later, the naphtha cracker plant is expected to produce at least one million tons of ethylene per year, and build downstream units that will produce other refinery derivative products to meet the global industry’s demand, especially in Indonesia.
According to Tallulembang, the petrochemical project in Balongan is different from the RDMP. However, the construction site will not be far from the location of the Balongan RDMP.
Several stages of refinery development that must be carried out this year include completing the pre-Feasibility Study (FS), starting the Bankable Feasibility Study (BFS), starting the management of Environmental Impact Analysis (Amdal) and land reclamation. The project’s completion and the refinery’s operation start is expected to happen in 2026.
The existence of Balongan petrochemical refinery will significantly boost Indonesia’s oil processing capacity. In addition to Balongan petrochemical refinery, several other refinery projects are also underway.
Today, Pertamina’s petrochemical processing capacity is only 700 kilotons per annum (ktpa). However, the capacity will increase gradually after the completion of a refinery megaproject; consisting of two new refineries, Tuban and Bontang. There are also four existing refineries that are being revitalized; Balikpapan, Cilacap, Balongan and Dumai refineries.
“Once we completed everything, in 2026 we will be able to produce around 6,600 ktpa of petrochemical products,” Tallulembang said.
Imports from the US
PT Pertamina (Persero) for the first time bought crude oil from the United States. The volume was 600,000 barrels. The ship carrying the oil is scheduled to dock in Indonesia on June 7.
Hasto Wibowo, Senior Vice President (SVP) of Integrated Supply Chain (ISC) at Pertamina, said that the oil purchased meets all specifications for domestic processing.
“It’s true. [The oil] will be processed in Cilacap [refinery], it’s a light type crude with a volume of 600,000 barrels,” Hasto said when on Friday (4/26).
According to Hasto, light type oil is not a new item imported by Pertamina and has been routinely processed in the Cilacap Refinery. “This means that we have a routine need for light [crude],” he said.
The derivative product from American crude oil will be fuel oil (BBM). “Light grade produces gasoline fractions (Pertamax and Premium),” Hasto said.
According to Hasto, in addition to getting the appropriate type of oil, purchasing from the United States benefits Pertamina because of the good price.
“US crude just happened to win the tender,” Hasto said.
Pertamina will still have to import in order to meet the demand that far exceeds its supply capacity. But now, the import volume would be less.
The situation is inseparable from the government’s policy of mandating companies to prioritize the purchase of oil from contractors operating in Indonesia, including from Chevron, which is operating in the Rokan block. (RI)