Oil Refinery initiates potential partnerships for $3.2B upgrade in Indonesia

JAKARTA, (Reuters) - Pertamina has approached the State Oil Company of Azerbaijan (Socar) and Japan’s JX Nippon Oil & Energy Corp for possible partnerships to upgrade Indonesia’s Balikpapan oil refinery, a Pertamina director said.

Indonesia’s state-owned energy company Pertamina had earlier initiated a partnership with JX Nippon for the Balikpapan upgrade but canceled their cooperation in January 2016 amid cost concerns and a longer-than-expected project timeline.

“There’s two or three candidates. There’s (one) from Azerbaijan - Socar (and) from Japan there’s JX Nippon,” Pertamina Megaproject Director Heru Setiawan told reporters at an industry conference, referring to the Balikpapan project. “We are inviting JX Nippon again to see if they are interested or not.”

Earlier, Pertamina estimated the first stage of the Balikpapan upgrade to cost up to $3.2 billion.

“If there’s more than one (partner) it would be OK. We’d have a majority (holding) of 51 percent at least,” he added referring to the refinery upgrade project in East Kalimantan province.

Pertamina’s acting Chief Executive, Nicke Widyawati, said in May that the company had started work on the first stage of the Balikpapan upgrade, which will add 100,000 barrels per day (bpd) to the refinery’s existing 260,000 bpd of crude processing capacity and is expected to be completed by 2021.

Setiawan said Pertamina is “also in the process of seeking a partner” for its planned upgrade for the Balongan refinery.

“All our refineries are open” to forming partnerships, he said.

The Balongan upgrade, at a cost of around $1.2 billion, is expected to increase the facility’s crude processing capacity by 140,000 bpd from 100,000 bpd at present. The plant is located in the province of West Java.

A Tokyo-based spokesman for JX Nippon did not immediately respond to a written request for comment.

(Reporting by Wilda Asmarini; Additional reporting by Aaron Sheldrick in TOKYO; Writing by Fergus Jensen; Editing by Christian Schmollinger)

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