Indonesia: Refinery Project Pertamina Awards 10 Billion Dollar Project to Japanese-Omani Consortium

Editor: Alexander Stark

The Indonesian state oil and gas company Pertamina partners with Omani OOG and the Japanese company Cosmos Energy Holdings for the construction of the Bontang refinery. The value of this development project is estimated at $ 10 billion.

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Construction of the refinery in Bontang Regency, East Kalimantan is expected to add a capacity of 300 thousand barrels per day. (sample image)
Construction of the refinery in Bontang Regency, East Kalimantan is expected to add a capacity of 300 thousand barrels per day. (sample image)
(Source: Pixabay / CC0 )

Jakarta/Indonesia — The construction of the Bontang refinery is one of the Indonesian government's programs to build a new refinery or Grass Root Refinery (GRR) with the aim of increasing the country's independence from energy imports.

The consortium was chosen after a selection process was carried out since January 2017, which was initially attended by around 100 companies. The state company made it a condition that the future partners agreed that Pertamina would hold a 10 % stake in the project, without participating in the financing of the project. In addition, Pertamina has the right to supply up to 20 % of Bontang GRR crude oil but does not provide a guarantee to accept the entire output.

Accepting these terms, two companies remained after the selection process: OOG was chosen as a strategic partner with several considerations, including OOG getting full support from Oman government for project funding and supply of crude oil. Technical support and marketing of the products will be assumed by Cosmo Energy Holdings.

Construction of the refinery in Bontang Province, East Kalimantan is expected to add a capacity of 300 thousand barrels per day which will be used to produce gasoline and diesel. The development is expected to provide up to 20,000 jobs during the construction project, and about 1,600 people when the refinery is in operation.

I a next step, Pertamina and selected partners will sign Frame Work Agreement followed by Feasibility Study (FS) which will be completed by mid 2019, followed by engineering package (Feed) until 2020. Bontang refinery is scheduled to start operating in 2025.

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