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Government Assesses Continuation of Bontang Refinery Project

 


The Ministry of Energy and Mineral Resources (ESDM) said the project to build a new fuel oil (BBM) refinery in Bontang, East Kalimantan was being reviewed again. In fact, this refinery project is still listed in the list of National Strategic Projects in accordance with Presidential Regulation Number 109 of 2020.

Since PT Pertamina ended its contract with a partner in 2019, the Bontang Refinery is still being studied, "the Director of Development of the Oil and Gas Program as well as the Acting Director of Downstream Oil and Gas Business Development at the Ministry of Energy and Mineral Resources Soerjaningsih.



The contract in question is the frame work agreement / FWA agreement between Pertamina and its partner Overseas Oil and Gas LLC (OOG), an oil and gas company from Oman. Pertamina stated that it had not continued the agreement that became the basis for forming the joint venture company for the Bontang Refinery Project since February 2020.

 the Bontang Refinery Project

Soerjaningsih said that the continuation of the Bontang Refinery Project was also hampered by land problems. Originally the refinery would be built on government-owned land in Bontang.

"There is a problem that the location in Bontang which is owned by the government is insufficient and this is still a special study related to capital expenditure," he explained.

Nicke Widyawati

Pertamina has stated that it has not continued with the Bontang Refinery Project since the middle of last year. At that time, Pertamina's President Director Nicke Widyawati revealed that his party would re-evaluate the refinery projects being undertaken, namely the Bontang Refinery. This also means that the company will no longer continue the process of finding new partners for this refinery project.

"The Bontang refinery hasn't been built yet," said Nicke.

Nicke briefly explained that this step was taken after the demand for fuel oil decreased after the Covid-19 pandemic. The company sees that although it will still grow, the increase in fuel oil (BBM) consumption is not likely to be as high so far. Apart from that, the Company's partners in the Bontang Refinery Project declared their resignation.

"So we will count the refinery project again. Previously there were six refinery projects, four refinery upgrading projects, and two building new refineries, we are correcting this. We only built one new refinery and upgraded four existing ones, ”explained Nicke Widyawati.

On the other hand, in Presidential Regulation number 109 of 2020, the Bontang Refinery Project is still included in the list of National Strategic Projects. Referring to this regulation, refinery projects that are included in the National Strategic Project are the Tuban Refinery Project, repair and upgrading of existing refineries in Central Java, East Kalimantan, Riau, and South Sumatra, upgrading and development of the petrochemical industry in Balongan, West Java, and construction of green refineries in Cilacap, Central Java and in Plaju, South Sumatra.

Soerjaningsih continued, the review of the Bontang Refinery Project would not interfere with the security of fuel supply in the future. For diesel, he said that almost all national needs can be met from domestic refinery production. In fact, for avtur, national production in 2020 can then be exported. The potential for avtur exports will be even greater with the completion of refinery projects.

"Meanwhile, imports of gasoline (gasoline) are still very high. However, with the onstream (operation) of the Balikpapan refinery in 2022 and several other refineries, it still imports [gasoline] but it is not too big, ”he explained.

The Bontang refinery, which was designed to have a capacity of 300 thousand barrels per day (BPD), was scheduled to operate in 2026. Now, without the Bontang Refinery, Pertamina projects that its processing capacity will increase from 1 million bpd to 1.8 million BPD. In addition, fuel production capacity will also increase from 600 thousand bpd to 1.5 million bpd and petrochemical products from 44 thousand bpd to 258 thousand bpd. All refineries will also be able to process crude oil with a sulfur content of up to 2% and produce Euro V quality fuel oil (BBM).

Investor Daily, Page-10, Thursday, Jan 21, 2021

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