Downstream strategy expands to Indonesia

Indonesia is a rising powerhouse in the global economy with a refining sector that has vast potential and rising local demand for domestic energy products. To continue to fuel the country’s development, state-owned PT Pertamina and Saudi Aramco have signed a Heads of Agreement (HoA) to upgrade the Cilacap Refinery located in Central Java, with an investment of $5.5 billion.

Under the agreement both companies will formalise key business principles for joint ownership, operation, and upgrade of the Cilacap Refinery as part of Pertamina’s Refinery Development Master Plan (RDMP). With deep rooted trade and cultural ties to Saudi Arabia, Aramco was also selected as a strategic partner for the Balogan refinery in Java and Dumai refinery in Sumatra.  
Cilacap Refinery was built in 1974 and is Indonesia’s largest refinery, producing approximately 348,000 bpd. The proposed upgrade will enable the refinery to process more sour crudes, meet high quality product specifications (Euro IV), and produce basic petrochemicals and lubricant base oils. The capacity expansion to 370,000 bpd will help Indonesia meet its increasing demand of refined products, lubricant base oils, and petrochemicals. 

The partnership also includes a long-term agreement for Aramco to supply Arabian crudes to the Cilacap refinery, which will pave the way for the next phase of development and collaboration between the two parties. The basic engineering design study for the upgrade is expected to be completed later this year.

The HoF formalisation takes place during high petroleum demand in Southeast Asia, and Saudi Aramco’s participation in the RDMP is a significant component in its global downstream expansion portfolio strategy, designed to make Saudi Aramco the world’s leading integrated energy and chemicals company.

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