Aramco Withdraws from Cilacap JV


Pertamina disclosed last week that Saudi Aramco has withdrawn from discussions about a plan to jointly expand the Indonesian energy company’s refinery in Cilacap, Indonesia.

In a May 28 press release, Pertamina said it will look for another partner in the project, which was previously said to include an upgrade of the refinery’s base oil unit.

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Aramco, the Saudi Arabian oil giant, has not publicly confirmed its withdrawal, but Pertamina’s statement said it will carry on the project by itself while also searching for a new partner. Fajriyah Usman, the company’s vice president for corporate communications, acknowledged that the environment for such projects has worsened due to the fall-off in fuels demand resulting from lockdowns to counter the Covid-19 pandemic and devaluation of Indonesia’s rupiah, but he said Pertamina remains committed to helping the country reduce dependence on fuel imports. The Cilacap project is part of a broader effort for Pertamina to double its refining capacity from 1 million barrels per day to 2 million b/d.

The base oil plant at Cilacap has capacity to make 450,000 metric tons per year of API Group I base oils. In 2015, when Pertamina and Aramco signed a heads of agreement to expand the refinery in two phases, officials said the second phase would include installation of a 43,000 b/d hydrocracker that would be used to upgrade base oil output.

The first phase of the $5.5 billion project would raise throughput capacity of the refinery’s crude oil distillation units from 348,000 b/d to 370,000 b/d. The second phase would also increase output of aromatics and polypropylene.

Like oil companies around the world, Aramco has been hammered by a crash in crude oil prices and a sharp drop in fuels demand.