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Pertamina and Saudi Aramco sign Heads of Agreement for Cilacap Refinery

In the presence of Indonesian Vice President Muhammad Jusuf Kalla, Indonesia’s state-owned oil and gas company PT Pertamina and Saudi Aramco, the state-owned oil company of Saudi Arabia, signed a Heads of Agreement on Nov. 26 to formalize key business principles for joint ownership, operation and upgrade of the Cilacap Refinery located in Central Java, Indonesia as part of Pertamina’s Refinery Development Master Plan.

The signing was held during the Vice President’s inauguration of the newly commissioned Residual Fluid Catalytic Cracking (RFCC) facility at the Cilacap Refinery, and the kickoff of the Blue Sky project, both of which are designed to produce higher quality gasoline.

Also present were President and Chief Executive Officer of Saudi Aramco Amin H. Nasser and President Director and Chief Executive Officer of PT Pertamina Dwi Soetjipto.

The proposed Cilacap Refinery upgrade will enable the refinery to process more sour crude oil from Saudi Arabia, meet Euro IV product specifications and produce basic petrochemicals and lubricating base oils.

The capacity expansion to 370,000 barrels per day (bpd) will help Indonesia meet increasing local demand for refined products, lubricating base oils and petrochemicals. The agreement includes a long-term supply agreement for Arabian crudes to Cilacap refinery.

The Heads of Agreement paves the way for the next phase of development within the scope of collaboration between the two parties. The Basic Engineering Design Study for the Cilacap refinery upgrade is expected to commence soon and be completed by 2016.

โ€œIndonesia is a rising powerhouse in the global economy, and has long deep-rooted trade and cultural ties with Saudi Arabia. It’s refining sector has enormous potential, and with Indonesia’s fast-growing demand for refined products, Saudi Aramco’s role in Cilacap can help fuel this country’s coming era of development and prosperity,โ€ said Nasser.

Participation in the project will offer Saudi Aramco a major growth component of its global downstream expansion portfolio aspiration, designed to make Saudi Aramco the world’s leading integrated energy and chemical company.

In July 2014, Pertamina offered Saudi Aramco and other strategic partners the opportunity to participate in its Refinery Development Master Plan to upgrade and expand five existing domestic refineries (Cilacap; Balongan; Dumai; Plaju and Balikpapan) from 820,000 bpd of aggregate processing capacity to 1,680,000 bpd. Saudi Aramco was selected by Pertamina as a strategic partner for three of the five refineries: Cilacap and Balongan in Java and Dumai in Sumatra.

Saudi Aramco signed an MOU on Dec. 10, 2014 giving the company exclusivity to conduct a feasibility study jointly with Pertamina for the three refinery expansions and negotiate key business principles.