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NEWS UPDATES 17 July 2010

Pertamina seeks more Indonesian investors

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Having recently secured a partnership commitment with Kuwait Petroleum Corporation (KPC), state-owned oil company PT Pertamina says it is looking for more investment partners to expand the existing a refinery in Balongan, West Java, that will cost US$8 billion.

“The capital needed to build [this refinery] is enormous… We expect more investors to join with Pertamina and Kuwait,” State Enterprises Minister Mustafa Abubakar told Jakarta Post reporters in Jakarta on Friday.

Mustafa said KPC and Pertamina would meet in the near future to determine ownership stakes in the project. Pertamina is expected to push for a majority share.

The Balongan refinery currently has a total processing capacity of 125,000 barrels of oil per day. The expansion is expected to raise that capacity to 325,000 bpd in 2014. At present, Pertamina operates six refineries with a total capacity of 1,036,000 bpd. About 65 percent of this oil comes from domestic production and the remaining 35 percent from imports. Mustafa also said that several companies from Middle Eastern countries had expressed interest in supplying crude oil to the Balongan refinery.

“The companies are from Iran, Libya and Kuwait, like KPC, however Kuwait can supply 300,000 barrels per day [bpd] but Iran [can supply] 150,000 bpd,” Mustafa said. Basuki Trikora, Pertamina’s vice president of communications, said no formal arrangements had been made in securing crude oil suppliers.

“It is still an ongoing process. Besides, the MoU for the Balongan expansion project will be signed later in October,” Basuki said.

Minister Mustafa said he believed that increasing the Balongan refinery’s output capacity would solve fuel supply problems in several regions in the country and also improve Pertamina’s long-term financial performance.

“I believe the new Balongan refinery will reduce the amount of fuel that Pertamina imports,” he said.

Previously, Pertamina president director Karen Agustiawan said that Pertamina would stop importing fuel in 2015.

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