W

ork on the Cilacap refinery upgrades has entered a new stage with the appointment of Amec Foster Wheeler Energy Limited to carry out its basic engineering design (BED).

The appointment of Amec was announced and signed on Monday by state-owned oil and gas company Pertamina and Saudi Arabian oil giant Saudi Aramco, which jointly own the Cilacap project.

The UK-based Amec will have nine months to work on the BED, paving the way for Pertamina and Saudi Aramco to proceed with engineering preparations or front end engineering design (FEED) in 2018.

The next step will see Pertamina and Saudi Aramco conduct engineering, procurement and construction (EPC) in 2019, before finishing the upgrade in 2022.

Once completed, the upgraded refinery — worth between US$4 billion and $5 billion — will produce 370,000 barrels of oil per day (bopd) from 345,000 (bopd) at present.

The oil produced is expected to be of better quality as well, with complexity level from 3 to 9 and higher value-added products from 73 percent to 96 percent.

“Better quality refined oil will produce more environmentally friendly gasoline and diesel in the future,” said Energy and Mineral Resources Minister Sudirman Said after the announcement.

The upgrade will also increase the refinery’s capacities to produce petrochemicals, such as aromatics to 600 kilo tons per annum (KTPA) and polypropylene to160 KTPA.

Sudirman said the Amec contract signing was a landmark follow-up to the signing of Pertamina and Aramco’s head of agreement in November last year.

Pertamina and Saudi Aramco are now waiting for the finalization of their joint venture at the Law and Human Rights Ministry, while waiting for the BED to be completed.

Pertamina president director Dwi Soetjipto said Pertamina would hold majority stake with 55 to 60 percent in the joint venture.

Saudi Aramco vice president for international operations Sahid Al-Hadrami said in addition to providing funds, the company was also committed to developing the best refinery in Cilacap by contributing technical and engineering know-how.

As previously reported, the Cilacap refinery upgrade is part of Pertamina’s Refinery Development Master Plan (RDMP). Under the RDMP, Pertamina is set to build new refineries, namely Bontang in East Kalimantan province and Tuban in East Java province.

It is also looking forward to upgrading three other major refineries, such as in Balikpapan in East Kalimantan province, Dumai in Riau province and Balongan in West Java province.

The six refineries are expected to produce a combined of 2.3 million bopd by 2025 from less than 1 million bopd at the moment.

The country consumes 1.5 million bopd, but can only produce some 800,000 bopd, forcing the government to import 700,000 barrels every day.

“The big projects will reduce Indonesia’s import dependency and save up on foreign currency reserves,” Sudirman said.

Meanwhile, Pertamina expects to complete first stage of the Balikpapan refinery upgrade by 2019.

Pertamina finance director Arief Budiman said earlier that it would need $2.6 billion for the next three to four years to support the first stage of the upgrade.