Pertamina will Release PHE to the Stock Exchange

PT Pertamina (Persero) states that one of the sub holdings prepared to be offered to the public is upstream sub-holding which is operated by PT Pertamina Hulu Energi (PHE). This strategy is to increase the company's oil and gas production to be better.

PT Pertamina Hulu Energi (PHE)

Pertamina President Director Nicke Widyawati said, in managing oil and gas blocks, the company usually also partners with other companies. The reason is, by working with other companies, oil and gas production can be more optimal. 

Nicke Widyawati

   In fact, to work on the Rokan Block, the government requires Pertamina to partner with other companies. This is also the basis for the company to prepare upstream sub-holding for the IPO.

"The first thing we will see [for IPO] is upstream sub-holding," said Nicke Widyawati.

Nicke Widyawati explained, many of the company's upstream assets still have the potential to be developed. However, the development of oil and gas blocks requires huge funding. In the future, around 60% of the company's total budget will be used to fund the upstream oil and gas project.

"So, later the funds obtained from the IPO will be used for upstream investment," Nicke said.

Upstream oil and gas investment, called Nicke Widyawati, is not limited to the upstream oil and gas assets owned by the company. Funds from the IPO will also be used to add new upstream oil and gas assets.

"Our IPO will use the funds for the upstream acquisition," said Nicke Widyawati.

At the end of last year, the company had budgeted funds for the acquisition of oil and gas blocks of US $ 150 million this year. Although it is not yet certain which block is targeted, the company is eyeing assets in Africa and the Middle East.

Energy observers from Trisakti University Pri Agung Rakhmanto rate, the IPO step is very good to improve corporate governance, because it must be more open. IPO is also good to be able to raise funds from third parties (public).

"For Pertamina's upstream, which does require strengthening funds for investment, this is positive. When it comes to performance, that's another thing, it also depends on how to run the company, "he said.

Regarding Article 33 of the 1945 Constitution which states that production branches which are important for the State and which control the lives of many people are controlled by the State, according to him, it does not become an issue if the IPO does not relinquish the majority of share ownership.

"As long as the majority shares are still in the country, in my opinion, more positive," said Pri Agung.

He added Pertamina was not the first oil and gas BUMN to be listed on the exchange. At present, there are already many other state-owned oil and gas companies listed on the stock exchange, such as Petrobras which is a Brazilian oil and gas BUMN, Petronas Malaysia, YPF Argentina, Statoil Norway, and Saudi Aramco Saudi Arabia.

Management of Oil and Gas Blocks

In addition to the IPO plan, Pertamina is also restructuring its oil and gas block management. Nicke explained, after the sub-holding was formed, the management of the oil and gas block would be done by region. Previously, despite being in one area, the management of the oil and gas block was carried out by a different subsidiary. For example in Sumatra, there are oil and gas blocks managed by PHE and PT Pertamina EP.

"We think this should be managed in synergy and coordination, so there can be efficiency. For this reason, under the sub-holding [oil and gas block] is managed in a way regionalization, "explained Nicke Widyawati.

In this way, all resources and equipment procurement can be synergized. All this time due to being separate, procurement of tools such as rigs has become difficult and long. This is because among subsidiaries scrambling to find rigs, while the number of rigs in the market is limited. 

    Other parties are also reluctant to increase the number of rigs because the company's procurement contracts tend to be short-term. These problems have become one of the causes of exploration and achievement of upstream oil and gas production below the target.

"This is how we manage all assets more efficiently and at the same time, improve our products and services," said Nicke.

It also wants to encourage investment in rig procurement in the country. Under the upstream sub-holding, there are several subsidiaries that will work on Pertamina's oil and gas blocks in certain areas. 

    Precisely, Pertamina EP will manage the company's oil and gas block in Java, PT Pertamina Hulu Indonesia will work on upstream oil and gas assets in Kalimantan, Pertamina EP Cepu (PEPC) will handle oil and gas working areas in Eastern Indonesia, and PT Pertamina International EP continues to manage oil and gas blocks outside the country.

Dwi Seotjipto

Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Seotjipto said, his party would see Pertamina's explanation of organizational changes in upstream sub-holding, mainly related to the authority of each operator in Pertamina's oil and gas block. The reason is that the Production Sharing Contract / PSC signed by the government is the company that is the operator.

Blogger Agus Purnomo in SKK Migas

"With the sub-holding, we will later see its authority in investment as well as the implementation and operation of the oil and gas block concerned," Dwi Seotjipto said.

Regarding the implementation of the contract, this depends on the bureaucracy established by Pertamina in the presence of this sub-holding. If the bureaucracy and decision-making are simpler, and the authority of the oil and gas block operator can be supported, there will be no problems.

"Hopefully it is better, the important thing is that the bureaucracy is not long, so the investment step is faster," Dwi said.

Investor Daily,  Page-10, Tuesday, June 16, 2020

Oil Lifting 2020 Predicted 705 Thousand BPD

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) projects national production of ready-to-sell oil (facelift) up to the end of the year to only reach 705,000 barrels per day (BPD) or more than the security of the security of the food security) by 755,000 BPD. 

   

  This is through with the Covid-19 pandemic. However, SKK Migas is starting to commit to a recovery starting next year. In 2030, oil is targeted to reach 1,000,000 BPD.

"Applying 705,000 BPD that makes sense, we can obtain in 2020. Raise the challenge we are discussing is restoring next year so that next year does not decline again," said SKK Migas Head Dwi Soejipto.

Dwi Soejipto

Dwi said the raised projections were from 15 cooperation contract contractors (KKKS) representing 96% of the national production line. In the first place was occupied by Mobil Cepu LTD then accepted by PT Chevron Pacific Indonesia (CPI) with the Rokan Block.

PT Chevron Pacific Indonesia (CPI)

Although Chevron finished managing the Rokan Block in August 2021, efforts to optimize production are still carried out. It was estimated that it would have decreased by 20 thousand BPD but until the end of May, it could still produce 180 thousand BPD. 

the Rokan Block from Chevron (CPI)

    He said SKK Migas was guarding the transition period for the management of the Rokan Block from Chevron (CPI) to Pertamina. This is to avoid a decrease in production as happened in the Mahakam Block.

the Mahakam Block

"We hope that by the end of the year we will be able to optimize easily. Currently, it is still being discussed with CPI so that they can invest again in this transition period, "he said.

Dwi further agreed to wait for oil and gas projects scheduled to be completed this year. In the third quarter of 2020, a number of migration projects began production, the Malacca Strait Project Phase-1, the Beauty Field in the Belida Block, the Betung Compressor Project and Musi Timur SKG-19, the Meliwis Field in the Madura Offshore Block, and the Peciko Field in the Mahakam Block.

 

"We are optimistic that the additional production from these projects will help achieve the year-end appointment target," Dwi said.

In 2020, SKK Migas starts 11 oil and gas projects can start onstream. To date, five oil and gas projects have been approved and can provide additional oil production of 3,182 BPD and gas 109.5 million standard cubic feet per day / MMSCFD.

Dwi further revealed that there were 4 national strategic projects among Tangguh Train 3, which began at the completion of 2020 essence, until the end of III or the end of 2021. Realization until May 2020 was approved for land 82.45% of the target of 83.15% and offshore 98.15% offshore 98.15% of the target of 99.35%.

Jambaran Tiung Biru

Then, Jambaran Tiung Biru is planned to be streamed from the third quarter of 2021 to the fourth quarter of 2021. Introduced until May yesterday received 64.54% of the 69.60% target. The next project is being prepared by Inpex Abadi Masela and expected to be streamed in 2027. 

Inpex Abadi Masela

   While the Indonesia Deepwater Development (IDD) project for the Gendalo and Gehem working areas is in the process of improving the consortium and developing a development plan (Po) to Development (PoD) to Development (Po)

Gendalo and Gehem Project by Chevron

Oil and Gas Potential

He explained, Indonesia has a huge oil and gas potential with 128 basins. Of these, 27 basins have been produced. He said there was a need to transform possible into the second package by declaring the production of one million barrels in 2030. He said the government was now more flexible for investors to choose the production sharing contract between Gross Split or Cost Recovery.

But he asked for legal protection made by the Oil and Gas Law to guarantee certainty for investors. Even though production reaches 1 barrel jute in 2030, by 2030 it is projected that the demand for fuel oil (BBM) reaches 2.7 million barrels. This means that industry support is needed for fuel oil to gas.

"There must be a policy that encourages using gas, getting relief from those who use fuel," Dwi said.

Investor Daily,  Page-1, Tuesday, June 16, 2020

Investment Management of Pertamina Refinery Project

      Coordinating Ministry of Maritime and Pertamina Investment Management of Pertamina Refinery Project

The Maritime and Investment Coordinating Ministry will oversee all the refinery projects worked on by PT Pertamina (Persero). This follows the continued refurbishment of the Pertamina refinery project with its two partners, Saudi Aramco and Overseas Oil and Gas (OOG) Llc.

Deputy of Maritime Sovereignty and Energy of the Coordinating Ministry of Maritime Affairs and Investment Purbaya Yudhi Sadewa said the refinery project will continue. Regarding the withdrawal of two Pertamina partners from the national refinery project, this does not mean that the interest of international oil and gas companies to work on refinery projects is minimal.

"I am still optimistic that refinery investment will continue if it is well guarded," he said.

CPC Corporation - Taiwan

He recounted that he participated in overseeing one of the Pertamina refinery projects in Balongan, West Java Province, which is a refinery project that processes crude oil into petrochemical products. He continued to convince Taiwan Petroleum Corporation (CPC) of Taiwan to continue working with Pertamina. In fact, with the fall in oil prices, some companies actually withhold investment.

For information, at the end of last week, Pertamina and CPC signed the Head of Agreement / HoA for the development of the Integrated Petrochemical Industry Complex in Balongan. The petrochemical project is targeted to start operating in 2026. Purbaya said that the refinery project has many obstacles. One of them is the oil and gas mafia which complicates the construction of refineries.

oil and gas mafia

"I realize that investing in refineries is huge. We are dealing with oil and gas mafia. We are escorted. This can take place well, "he said.

Meanwhile, Energy Observer from Trisakti University Pri Agung Rakhmanto revealed, the investor's decision to invest in a project is very dependent on the return on investment from the project. If the return on investment offered falls within their criteria and there is a guarantee of certainty, investors will also work on the project.

"That's the principle. As long as there are no bright spots, investors will look for other investments, "he stressed.

He suggested, because Indonesia, which needed this investment, should be able to provide a guaranteed rate of return on investment for the refinery project. Moreover, the partnership between Pertamina and other oil and gas companies will facilitate the completion of the refinery project.

"If it can be a partnership, why should it be alone? If in business and investment, partnerships will not only strengthen but also for risk sharing, "explained Pri Agung.

Previously, in February, Pertamina said that it would not continue to work together on the development of the Bontang Refinery with OOG. Pertamina and OOG did not extend the framework agreement / FWA which formed the basis for the two companies to form a joint venture.

Pertamina also did not continue to cooperate with Saudi Aramco in the project of upgrading and upgrading the Cilacap Refinery. The reason is that the oil and gas company originating from Saudi Arabia is still focused on working on other projects, while Pertamina hopes to be able to work on the refinery project soon.

Still interesting

Purbaya added, oil and gas companies are still interested in working on refinery projects in Indonesia. One of them is that there is a company from China that plans to build a refinery. Unfortunately, Purbaya claimed not to know the details of the refinery project, including its capacity.

"There is a Chinese company asking for our approval to support the investment of US $ 6 billion-US $ 8 billion in the Batam, Riau Islands region," he said.

According to him, it is likely that the Chinese company will work on the refinery project itself, aka not cooperating with Pertamina. However, for the sale of refinery products, it is possible that the company will cooperate with Pertamina.

"But they say they can also sell international markets. Therefore the choice is in the Riau Islands Region, near international shipping lines, "said Purbaya.

In addition, Purbaya added that investment interest in the national refinery project was also conveyed by companies from the United Arab Emirates (UAE), namely the Abu Dhabi National Oil Company (ADNOC) and Mubadala Investment Company.

"So the enthusiasm and interest of investing in refineries is still very large," said Purbaya.

Referring to Pertamina's official statement, ADNOC agreed to learn more about the potential for developing the Integrated Petrochemical Refinery Complex in Balongan, West Java. Pertamina and Adnoc signed a memorandum of understanding at the end of last year.

the Tuban Refinery in East Java by Rosneft

While the Mubadala Investment Company is interested in becoming an investor in the Balikpapan Kalimantan Province Refinery Project worth the US $ 5.5 billion. In addition, Pertamina also continues to work on the Tuban Refinery in East Java with Rosneft Oil Company as its partner. 

    The two companies have formed joint ventures, namely PT Pertamina Rosneft Processing and Petrochemicals. Now the project has reached the stage of land acquisition and preparation of engineering design (general engineering design / DED).

Investor Daily, Page-10, Thursday, June 11, 2020.

The Government Guarantees Legal Certainty in the Development of Tuna Blocks

The Coordinating Ministry for Maritime Affairs and Investment guarantees the legal certainty of the development of the Tuna Block by the oil and gas company from the UK, Premiere Oil.

Premiere Oil.

This is because the location of the Tuna Block in Natuna waters, which is the border of Indonesia, is prone to conflicts from the geopolitical side. 

the Tuna Block By Premier Oil

     Deputy for Maritime Sovereignty and Energy Coordinating Ministry of Maritime Affairs and Investment Purbaya Yudhi Sadewa said the government provides legal certainty guarantees for companies investing in Indonesia. 

   One company that needs this guarantee is Premiere Oil which is working on the Tuna Block, which is located on the border with Vietnam.

"So they asked us and we gave the certificate was Indonesian territory, so we maintain their security there. In 1-2 months we give the letter so that they can still operate there well there, "he said.

Zarubezhneft Rusia

In its annual report for 2019, Premiere Oil states that it has signed a prerequisite for the Heads of Terms with the Russian oil and gas company, Zarubezhneft Joint Stock Company (JSC).

The oil and gas company will take ownership of participating interest / PI in the Tuna Block by 50%. This stock sale agreement is targeted to be signed in 2020. Later, referring to the share sale agreement, Zarubezhneft will also bear the costs of drilling two appraisal wells that are planned to be carried out in 2020. The premiere is given an extension of the exploration period for one year by the government so that well drilling can take place.

Furthermore, Premier Oil is expected to submit the plan of development / PoD of the Tuna Block in March 2021. Still referring to the annual report, Zarubezhneft mainly has a stake in the oil and gas block in Vietnam. While the Tuna Block is located in the Natuna Sea which is close to the Indonesian and Vietnamese sea borders.

The Tuna Block is estimated to have oil and gas reserves of around 100 million barrels of oil equivalent. Then referring to the official statement, in 2017, Premiere Oil and SKK Migas as representatives of the Government of Indonesia signed a memorandum of understanding / MoU on gas sales from the Tuna Block to Petrovietnam.

The gas produced from the Tuna Block will be channeled to the Nam Con Son Pipeline System in Vietnam through a cross-country pipeline being built. After the transfer of ownership of the PI is approved by the government, Premiere Oil will hold a 50% stake as well as becoming an operator in the Tuna Block.

the Nam Con Son Pipeline System

In Tuna Block, referring to the Premiere Oil page, there are two fields to be developed namely the Sea Horse Field and the Sea Lion. 

      Deputy Head of the Special Work Unit Fatar Yani Abdurrahman, the Executive of Upstream Oil and Gas Business Activities, explained that the development of the Tuna Block has a high risk because of its location bordering the South China Sea. For this reason, Premier Oil must have a partner in working on the block.

Investor Daily, Page-10, Thursday, June 11, 2020.

Upstream Oil and Gas Preparing to Go

Upstream oil and gas industry players are gearing up to spur operational performance when the new normal order is implemented. 

Dwi Soetjipto

    The Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto said that with world oil prices that have passed the level of US $ 40 per barrel became a positive sentiment for investment in upstream oil and gas activities in the country.

"With the improving oil price, investment in upstream oil and gas will also improve," he said.

Dwi added, his party would review upstream oil and gas activities to be more optimal.

"Next, we will wait for how to optimize activities in Hulu Migas in the new-normal era," he said.

Meanwhile, SKK Migas Deputy for Operations Julius Wiratno said that with the implementation of the new normal period it is expected that upstream oil and gas operational activities would be more productive.

"Because the mobilization of people and goods is not disrupted," he said.

SKK Migas has sent a circular to the Cooperation Contract Contractor (KKKS) related to the preparation and implementation of new normal operations. He revealed the preparation and implementation of new normal operations while adhering to existing health protocols and applicable in the area of ​​oil and gas operations. 

     There are no specific directives, which are important according to the existing protocol. "We're trying if we can quarantine before crew change for one week instead of 2 weeks," he explained.

Sonitha Poernomo

Chevron Pacific lndonesia Corporate Communication Manager Sonitha Poernomo said that the company continues to monitor the current Covid-19 pandemic situation. She said it had used guidelines from international and domestic health authorities.

"Our main concern is employee health and safety and we take precautions to reduce the risk of exposure by ensuring safeguards are available and functioning properly," She said.

Similarly, PT Medco Energi International Tbk. ensuring the sustainability of the company's operations during the Covid-19 pandemic. 

Hilmi Panigoro

     President Director of Medco Energi Hilmi Panigoro said that the company is committed to safeguarding the safety of workers in the work area and maintaining business continuity by complying with the Covid-19 health and safety protocols regulated by the government.

He said that his party was facing a period full of challenges. The rapid decline in energy demand in the face of increasing oil production is a challenge for the industry.

"However, Medco Energi is optimistic that it will succeed in facing challenges caused by the Covid-19 pandemic," he said.

Previously, Medco targeted the company's oil and gas production this year to reach 110,000 barrels of oil equivalent per day. In another development, PT Pertamina Hulu Energi said it would recalculate the economic value of the project in line with the upward trend in oil price movements.

Director of Pertamina Hulu Energi (PHE) Meidawati said that all projects undertaken would recalculate their economic value. The calculation was carried out on several exploration and development drilling projects that can maintain and increase the company's oil and gas reserves and production.

Bisnis Indonesia, Page-4, Thursday, June 11, 2020.

Pertamina EP Cepu Optimistic that JTB Project Operates on Time

PT Pertamina EP Cepu (PEPC) is optimistic that the Jambaran-Tiung Biru unitization project can be completed on time and operational in mid-2021. Although the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) sees no indication of delays in the execution of this project.

Jamsaton Nababan

PEPC Managing Director Jamsaton said, his party understood SKK Migas' concerns regarding the potential pullback of the JTB Project. The reason is SKK Migas could have estimated the assumption of the worst scenario considering the impact of the Covid-19 pandemic on the work of national oil and gas projects.

PT Pertamina EP Cepu (PEPC)

He admitted, there were several obstacles in the work of the JTB Project which indeed had the potential to cause delays. But it is trying to innovate to minimize the potential for these delays.

the Jambaran-Tiung Biru unitization project

"Namely by adjusting construction schedules and materials on site but by maintaining the onstream target in July 2021," Jamsaton said.

Jamsaton explained the obstacle faced was the limited workforce of experts who were willing to work in the field due to fears of contracting the Covid-19 Virus. Then, there are limitations to the mobilization of workers due to the enactment of Large-Scale Social Restrictions (PSBB) as prevention of the spread of the virus. The quarantine period imposed by the Bojonegoro Regency Government also reduced the effective working days.

"These three things cause the workforce needs in the field are not optimal so they cannot do construction speed-ups," he said.

Not only that, the process of manufacturing goods in several countries stalled due to lockdowns imposed in those countries. In a country that does not run a lockdown, the manufacturing process is slow due to restrictions on working hours and transportation of materials including manufacturing in Indonesia.

Investor Daily, Page-9, Wednesday, June 10, 2020.

Refinery Projects will remain in demand

The government is still optimistic that the oil and gas refinery project will still be attractive to foreign investors, even though a number of partners who have previously joined chose to resign due to the fluctuating pressure on the black gold price.

Overseas Oil and Gas LLC

One of the partners who have resigned is Overseas Oil and Gas LLC based in Oman, from the Bontang Refinery project in East Kalimantan Province, so that the project is currently suspended. In addition, Saudi Aramco has also recently withdrawn from the Cilacap Refinery project in Central Java Province.

Saudi Aramco

Deputy for Maritime Sovereignty and Energy Coordinating Ministry of Maritime and Investment Coordinating Ministry Yudhi Sadewa said he would investigate the withdrawal of Pertamina's partners in the Bontang Refinery project.

He acknowledged that low oil prices would make several countries withhold investment in advance. However, that does not mean that no one is interested in investing in a national refinery project. As an illustration, over the past year, the price of Indonesian crude oil (ICP) reached its lowest point in April 2020 at the US $ 20.66 per barrel and in May 2020 at the level of US $ 25.67 per barrel. Last year, the average ICP was the US $ 62.37 per barrel.

Purbaya revealed that Chinese investors were also interested in the refinery project in Batam, Riau Islands (Riau Islands).

"China will invest the US $ 5 billion to the US $ 6 billion in Batam. The Riau Islands ask for our support to support the investment, "he said.

However, he was unable to provide details on the capacity of China's investment plans in Batam.

"They say they can also go to the international market, therefore the choice is in the Riau Islands near the international shipping lane," he explained.

Purbaya is still optimistic that refinery investment will continue if it is properly guarded. He added that Abu Dhabi was also interested in building refineries in Balongan, West Java Province, and Dumai, Riau Province.

"Refinery investment has very large prospects," Purbaya said.

Previously, PT Pertamina (Persero) 's Megaprocessing and Petrochemical Processing Director Ignatius Tallulembang said that all Refinery Development Master Plan (RDMP) and Grass Root Refinery (GRR / new refinery) projects were still in the status of National Strategic Projects (PSN).

He added until now the entire refinery project construction process is still in accordance with the target. The breakdown includes, among others, Balongan Refinery which works in three phases, in phase 1 it has now entered the procurement auction process and is targeted to be onstream in 2022.

While for phase 2 studies are being carried out to increase its capacity which will be completed in September or October 2020 which will be followed by engineering studies.

CPC Corporation, Taiwan

For phase 3, Ignatius said, it was just agreed to cooperate with CPC partners from Taiwan related to petrochemical processing which would later integrate with existing refineries. Phase 3 is targeted for completion in 2026. Furthermore, at the Cilacap Refinery in Central Java, Pertamina is looking for new partners after Saudi Aramco decided to withdraw from cooperation in developing the refinery.

Double Impact

Ignatius asserted, although it requires a large investment, the refinery development can have multiple impacts on the economy. With a total investment of around US $ 48 billion if the project is completed, the refinery, which currently has a capacity of 1 million barrels per day, will increase to 2 million barrels per day so that fuel oil needs can be fulfilled without the need for imports.

Fahmy Radhi

     Gadjah Mada University's School of Energy Economics Fahmy Radhi believes the refinery business has a sustainable market certainty even though it requires a large investment fund with a long-term return on investment with a small return.

"I predict in early 2021, foreign investors will flock to Indonesia to invest in oil refineries," he said.

Fahmy believes that Pertamina must have a commitment that oil refineries are needed right now, so it needs a meeting to benefit both parties in the negotiation process. In addition, the government must provide a number of fiscal incentives and facilities in the process of land acquisition needed for refinery development.

Bisnis Indonesia, Page-14, Wednesday, June 10, 2020.

The Pertamina Refinery Complete Project Targeting Solar Export Opportunities

PT Pertamina (Persero) states that there is an opportunity to export diesel fuel to the Asia Pacific market, including Australia and New Zealand, once all refinery projects are completed in 2026-2027. Therefore, it is still important to proceed with the refinery project.

Pertamina Megaprojects Processing and Petrochemical Director Ignatius Tallulembang said, after all, refinery projects had been completed, Indonesia would be able to meet all national fuel needs, aka no more imports. In fact, for diesel fuel, his side projects an excess of production that can be exported.

"Solar will exceed their needs. But if you look at supply-demand in the region, such as Australia and New Zealand, they are in deficit and this is our opportunity to export diesel after the refinery project is completed, "he said at an online press conference last weekend.

He explained, although the Asia Pacific region, in general, would have an excess supply of diesel up to 1.06 Million Barrels Per Day (BPD), not all countries are able to meet their own needs. Based on the data used by the company, there are five countries that are projected to have a shortage of diesel in 2030, namely Vietnam, the Philippines, Papua New Guinea, Australia, and New Zealand.

According to these data, Australia will have a solar deficit of up to 427 thousand BPD, followed by the Philippines 152,000 BPD, Vietnam 104 thousand BPD, New Zealand 40,000 BPD, and Papua New Guinea 23,000 BPD. On the other hand, in 2030 after the refinery upgrading and upgrading project construction has just been completed, Pertamina's diesel production is estimated to be around 600 thousand BPD with domestic needs below 500 thousand BPD.

"So, excess diesel is not a problem, because it can be exported to countries that need it," Tallulembang said.

The refinery project also needs to be continued to improve the competitiveness of refineries because the technology of refineries in Indonesia is out of date. National refineries have lower complexity compared to refineries in other more modern countries. As a result, the yield or conversion rate to refinery value products in Indonesia is only around 75% compared to modern refineries which have reached 95%.

"The economics of our refineries are lower. This is because the technology used by the old technology is unable to compete, "he said.

Though referring to the same data, in the Asia Pacific there are countries that also have a very large excess of solar production. Some of these countries are China with a volume reaching 639 thousand BPD, South Korea 491 thousand BPD, Singapore 220 thousand BPD, and Japan 110 thousand BPD.

After the refinery upgrading project, Pertamina targets the national refinery product yield to increase to 95%. Not only that, but the fuel produced will also have a quality equivalent to EURO V.

Stop importing petrochemicals

Not only targeting foreign markets, Tallulembang said, excess diesel can also be used to produce petrochemical products. Moreover, Indonesia is still very dependent on imports to meet the needs of domestic petrochemical products, namely polyethylene, propylene, and paraxylene and benzene.

This is because the company's refinery project is integrated with petrochemical facilities. Two new 300 thousand BPD refineries built by Pertamina in Tuban, East Java Province, and Bontang, East Kalimantan Province, will be equipped with petrochemical processing. In addition, the company is also building a crude oil processing complex into petrochemical products in Balongan, West Java Province with China Petroleum Corporation (CPC).

China Petroleum Corporation (CPC), Taiwan

"From the material balance of the refinery project, we can meet the needs of [petrokima] in the country and eliminate imports altogether," Tallulembang said.

From the company side, the petrochemical business is still very promising in the future. From the results of Pertamina's study and evaluation, the plan to build a refinery will provide added value or profitability for both the company and the country.

Referring to Pertamina's data, the petrochemical production capacity in 2018 is far from needed. Specifically, polyethylene production was recorded at 806-kilo tons per year (kilo tons per annum / KTPA) from the needs of 1,791 KTPA, then propylene production of 903 KTPA from the demand of 1,745 KTPA, and paraxylene and benzene 560 KTPA from the needs of 1,324 KTPA.

While in 2030, the production of polyethylene increased to 3,868 KTPA, propylene 4,378 KTPA, and paraxylene and benzene 1,918 KTPA. On the other hand, the needs of these three types of petrochemical are projected below production capacity, namely 3,459 KTPA for polyethylene, 3,240 KTPA for propylene, and 1,810 KTPA for paraxylene and benzene.

Investor Daily, Page-10, Tuesday, June 9, 2020.