Pertamina to Diversify Refinery in $1.7bn Deal

The Jakarta Globe, Mita Valina Liem & Janeman Latul, March 3, 2009 

PT Pertamina on Monday signed a $1.7 billion agreement with Star Petro Energy of the United Arab Emirates and Japan’s Itochu Corp. to expand the state-owned energy producer’s product range and capacity at its oil refinery in Balikpapan, East Kalimantan Province, a senior Pertamina official said at the fifth World Islamic Economic Forum in Jakarta on Monday. 

Rukmini Hadihartini, Pertamina’s processing director, signed the memorandum of commitment for the investment plan, which is aimed at expanding refining capacity to include “bottom products” used to produce plastic bags, car parts and other substances. 

The refinery, with the capacity to process 260,000 barrels of oil per day, now produces premium gasoline, kerosene and other top-end products. It ships bottom product residue to Singapore to be processed into other petrochemical products. 

“We plan to process the residue into more valuable products such as petrochemicals,” said Anang Riskani Noor, Pertamina’s vice president of communications. “We have always exported our bottom products because we don’t have the ability to process them here.” 

Anang said the company was still discussing the kinds of goods to be produced. 

He added that the agreement followed a preliminary deal signed in September with Itochu and Star Petro Energy. 

“In this challenging economic environment it makes sense to be as efficient as possible with our investments,” Karen Agustiawan, Pertamina’s president director, said in a statement. 

“We believe cooperation is the solution. We want to build on our positive partnership experiences in Muslim and non-Muslim countries.” 

Star Petro Energy is a diversified company based in the United Arab Emirates with operations in the airline, mining and insurance sectors. 

Itochu imports and exports goods such as textiles, machinery and oil and gas products. 

Sheikh Saud Bin Saqr Al Qasimi, the crown prince and deputy ruler of the Ras Al-Khaimah Emirate, said Star Petro Energy was investing in a state-owned project rather than a private one because it felt that government-backed projects were safer in the current economic climate. 

It chose Indonesia, he said, because of the country’s wealth of natural resources. 

Pertamina has exploration rights to drill for oil and gas in Malaysia, Libya, Qatar and Sudan. 

The company expects to meet domestic fuel demand by improving the efficiency of its refineries, ports and transportation and distribution networks, it said.