Pertamina and Rosneft to Build in Indonesia

Indonesia’s oil and gas giant Pertamina and Russia’s Rosneft Oil have signed a framework cooperation agreement to develop an oil refining and petrochemical complex in Tuban, in the eastern part of Java, Indonesia. The deal is reported to be worth nearly $14 billion.

Pertamina would process around 300,000 barrel-per-day (bpd) of oil in the refinery which would be the country’s first to be built in 22 years and would reduce the country’s reliance on imports of oil, motor fuels and petrochemicals. Indonesia is said to import about 50% of its domestic oil requirements.

A final investment decision will be made on the results of a feasibility study as well as basic and front-end engineering design. The refinery is expected to be operational by 2022. According to media reports, Pertamina would have a controlling stake of 55% in the joint venture with Rosneft holding the remaining 45%.

As part of the agreement, another study is expected to look at the prospects for joint projects in the area of crude and oil products supplies, including the option for Pertamina to invest in Rosneft’s upstream industry in Russia, as well as international oil refining projects. Rosneft said the partnership would expand and strengthen its position in the Indonesian energy market, as well as the Asia-Pacific region.

Last December, Pertamina signed a deal with Saudi Aramco for upgrading its Cilacap refinery. The project, which will also enable some petrochemical production, is planned for completion in 2021.