Pertamina stops Balikpapan refinery operations from May

PT Pertamina (Persero) will stop the full operation of the Balikpapan Refinery starting in May following the decline in domestic demand for fuel oil (BBM). On the other hand, taking advantage of low world oil prices, the company will increase imports of crude oil and fuel.

Nicke Widyawati

Pertamina President Director Nicke Widyawati said, to mitigate the impact of the current conditions, his party would begin to reduce the refinery's operating capacity within certain limits according to demand conditions.

In the final scenario, the company has begun to reduce the capacity of the Balikpapan refinery this month, to finally stop its total operations for the two crude distillation units (CDU).

the Balikpapan refinery

"Starting in early May, the whole Balikpapan Refinery must stop. We use this moment to do maintenance. Where during slow down demand, some of our refineries are shut down for maintenance. So our maintenance is speeding up, "said Nicke Widyawati.

Nicke Widyawati explained that with world oil prices falling significantly and fuel consumption also being cut, the operation of the refinery in full is actually not economical and actually harms the company. However, it will continue to operate other refineries because the cessation of operation of all refineries will have an impact on the national economy.

"Refineries if only all of these operational economies are closed. But Pertamina has the responsibility as a driver of the national economy, therefore we remain in balance even though the economy is not the best, but how does Pertamina's operational impact on the national economy and job creation, "said Nicke.

He noted, since March 1, the average daily sales of fuel dropped significantly, namely 16.78% for gasoline and 8.38% for diesel compared to the daily average in January and February. Specifically, the average daily sales of gasoline in March-April recorded only 77.95 thousand kiloliters (KL) from the normal 93.66 thousand KL, while gasoline sales were only 37.84 thousand KL from the normal 41.31 thousand KL.

In fact, based on Pertamina's data, the company's fuel sales this year is targeted to reach 78.7 million KL. While related to refinery operations, still referring to the same data, the company targets crude oil processing including intermedia and gas at the national refinery this year to reach 355 million barrels, up 4% from the 2019 prognosis of 342 million barrels. While refinery production is targeted to reach 290 million barrels, up 6% from last year's prognosis of 273 million barrels.

Add Import

On the other hand, taking advantage of the drop in world crude oil prices, Nicke stated that Pertamina decided to increase its purchase of crude oil and fuel from abroad. This policy was taken because it was considered more economical. In particular, crude oil imports were 10 million barrels and gasoline 9.3 million barrels.
the Rokan Block

With this additional import, Pertamina plans to temporarily stop the purchase of domestic crude oil. Mainly from oil producers whose large production such as PT Chevron Pacific Indonesia (CPI) from the Rokan Block and Exxon Mobil Cepu Limited (EMCL) from the Cepu Block. This is because domestic oil prices are now more expensive than imports.

"Domestic crude has a high price, so if it is purchased, it will be heavy The COGS will increase dramatically. While imported crude is cheap, this is the right time for crude stock to be used for refineries to reduce refinery HPP. To take the opportunity for oil prices to fall, we optimize the existing storage, "explained Nicke Widyawati.

Related to the procurement of crude oil and fuel, based on Pertamina's data, the company sets the volume of crude oil imports this year at 83 million barrels, down 3% from the 2019 prognosis of 86%. Furthermore, imports of gasoline products are planned at 119 million barrels, up slightly from last year's prognosis of 118 million barrels.

Nicke added, his party also plans to increase imports of liquefied petroleum gas / LPG by 220 thousand metric tons. The addition of LPG imports is to take advantage of the low price of LPG according to Aramco CP. Pertamina's data shows that according to the RKAP, LPG import volume originally planned was 6 million metric tons, up 3% compared to last year's prognosis of 5.8 million metric tons.

Investor Daily,  Page-9, Saturday, April 18, 2020

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