Pertamina disclosed last week that Saudi Aramco has withdrawn from discussions about a plan to jointly expand the Indonesian energy company’s refinery in Cilacap, Indonesia.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