Pertamina secures project financing for Balikpapan refinery upgrade
PT Pertamina (Persero) announced that Balikpapan will become an environmentally friendly and modern refinery, which will be able to produce Euro 5 compliant products in the future.
Pertamina also said that the Balikpapan Refinery Development Master Plan (RDMP) is aligned with Indonesia’s energy transition roadmap.
The Balikpapan RDMP project will become an environmentally friendly refinery as it can significantly reduce emissions through energy efficiency in operations and the production of future products, thereby supporting the government’s net-zero emission program.
“The Balikpapan Refinery will be able to process almost all types of crude oil, with advanced processing capabilities, enabling us to search for crude oil more efficiently and at a lower cost, even those with high sulfur content. The quality of the products will improve from Euro 2 to Euro 5,” said President Director of PT Pertamina (Persero), Nicke Widyawati.
Also, as one of the largest investment projects in Indonesia, the Balikpapan RDMP brings a multiplier effect for regional economic growth by involving local companies, creating local job opportunities, and targeting a Domestic Component Level (TKDN) of 30-35%.
The modernization of the Balikpapan refinery has received financing support from four export credit agencies and 22 commercial creditors with a total value of USD3.1 billion to be disbursed to PT Kilang Pertamina Balikpapan (KPB).
Pertamina, through its Sub Holding Refining & Petrochemical PT Kilang Pertamina Internasional (KPI), held the Closing Ceremony for Project Financing of the Balikpapan RDMP on June 23, 2023.
Upon completion of the project, it is projected to save Indonesia’s current account by USD2.5 billion per year from petroleum products, LPG, and petrochemicals. Upon completion of the refinery modernization project, Balikpapan’s production will increase from 260,000 barrels per day (bpd) to 360,000 bpd.
Indonesia’s Deputy Minister of State-Owned Enterprises 1, Pahala Nugraha Mansury, said that the energy sector is crucial for Indonesia’s economic development as no activities can occur without energy support.
“The successful financing of the Balikpapan RDMP Project is undoubtedly an achievement for Pertamina, KPI, and KPB. It is currently the largest project financing in Indonesia, and even the commitments from the creditors have experienced an over-subscription of up to 42%,” said Pahala.
According to Nicke, Pertamina’s efforts to complete the Balikpapan RDMP, which has been ongoing since 2020, has not been hindered by the Covid-19 pandemic. The construction of the refinery has been in progress and currently stands at a progress rate of 74%, with a strong emphasis on maintaining safety and security measures.
Nicke added that the construction of the Balikpapan refinery posed a high level of difficulty as it is being carried out alongside the existing operational refinery.
“It is like building a new carriage while the same train is running fast, then we have to merge the new carriage with the existing ones. That is the challenge, and we can accomplish it,” said Nicke.
Another challenge is the use of large and heavy equipment, such as the Residue Fluid Catalytic Cracking (RFCC) Disengager/Stripper and Regenerator, with a total weight of approximately 3,100 tons, installed using a Giant Rigger Crane, a specialized crane imported from Belgium. These equipment have a multistage regeneration system, the latest method used in RFCC units to process residue (bottom product) into high-value and environmentally friendly petroleum products, thus improving the refinery’s economic/margin performance.
“There is no other project in the world which operates alongside an existing refinery like this. We continue to operate the refinery to maintain energy resilience and ensure an adequate supply of petroleum products, so that we don’t have to rely on imports,” said Nicke during the Closing Ceremony of the Balikpapan RDMP Project Financing.