Indonesia: Pertamina to cut some refinery projects in energy transition

  • State-owned oil and gas holding company Pertamina has decided to slash its refinery development plans as it diversifies away from oil-based fuels as part of its energy transition strategy.
  • Pertamina CEO Nicke Widyawati announced that the company had cancelled its plans to build a new refinery in Bontang, East Kalimantan, which was to be one of two new refineries under the grassroots refinery (GRR) project.
  • She added that Pertamina would focus resources on 3 refinery upgrade projects in its refinery development master plan (RDMP), instead of the initial 4.
  • The RDMP covers the Balongan, Balikpapan, Dumai and Cilacap refineries. She did not mention which one would be excluded.
  • “From 4 RDMP and 2 GRR [projects], we will focus on 3 RDMP and 1 GRR [projects], but all [will be] integrated with petrochemicals. Integrating with petrochemicals is safer for the future sustainability of our business,” Nicke told lawmakers on 28 Mar 22 at a meeting with House of Representatives Commission VI, which oversees trade and investment.
  • The decision was based on a Pertamina study that projected fuel oil would comprise only 20% of Indonesia’s total energy mix in 2050, down from currently 31%.
  • Its projections showed that coal would also decrease while natural gas would rise slightly, but the greatest increase would be renewables.
  • “With the government’s policy to push renewables development, we are reviewing whether we still need those refineries,” Nicke said.
  • The government aims to build more green energy power plants and encourage electric vehicle (EV) adoption in order to increase renewables in the national energy mix to 23% by 2025 and 31% by 2050.
  • Nicke said the refineries would come in handy in processing petrochemicals when the fuel demand dropped as Indonesia shifted to biofuels and EVs.
  • “Now, we are integrating those refineries with petrochemical facilities. For now, we are still supplying fuel, but once demand drops, we can switch those refineries to [processing] petrochemicals,” she said.
  • “We do not want them to become idle” because of the lack of a proper solution, she added.

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