Pertamina lets contract for Balikpapan refinery revamp

PT Pertamina has let a contract to PT Pupuk Indonesia subsidiary PT Rekayasa Industri (Rekind) to provide services related to inside and outside battery limits (ISBL, OSBL) projects as part of Pertamina’s previously announced Balikpapan Refining Development Master Plan (RDMP) project to upgrade and modernize its 260,000-b/d refinery in Balikpapan, East Kalimantan, Indonesia (OGJ, May 18, 2017, p. 25).

Alongside partners SK Engineering & Construction Co. Ltd., Hyundai Engineering Co. Ltd., and PT PP (Persero) Tbk., Rekind will deliver engineering, procurement, and construction services for the Balikpapan RDMP ISBL and OSBL projects, the service company said.

While Rekind did not reveal the specific projects involved under the contract, the company confirmed the consortium’s scope of activities would include works broadly focused on units designed for processing of residues into high-quality fuel, improving the quality of diesel and gasoline by reducing sulfur content to make fuels more environmentally friendly, and producing high-octane fuel oil.

Rekind disclosed neither the value nor timeframe of the contract, which was signed on Dec. 10 in Jakarta.

The Balikpapan RDMP project comes as part of the Pertamina’s broader 10-year, multibillion-dollar plan to revitalize operational capability of its Indonesian refineries by equipping them with enough flexible processing capacity to meet the country’s growing demand for cleaner petroleum-derived products and reduce its dependence on foreign imports (OGJ Online, Dec. 15, 2014; Oct. 7, 2013).

Previously due to be completed in 2019, Balikpapan’s RDMP Phase 1—which will increase the refinery’s crude processing capacity to 360,000 b/d from 260,000 b/d as well as enable production of fuels that conform to Euro 2-quality specifications—currently is scheduled for completion in 2021, Pertamina said in its 2017 annual report.

Designed to equip the refinery to produce Euro 5-quality fuels, Balikpapan’s RDMP Phase 2 will follow after RDMP Phase 1 is completed.

In 2017, Pertamina let contracts to Honeywell UOP LLC to provide technology licensing and engineering design both for a 33,000-b/d continuous catalyst regeneration unit as well as an expansion involving a 47,000-b/d hydrocracking unit as part of Balikpapan’s RDMP (OGJ Online, Feb. 2, 2017).

In 2016, the operator let a series of contracts to Axens SA and McDermott International Inc. (formerly CB&I) to provide technology licensing, design, and engineering on additional grassroots units to be added during the Balikpapan modernization (OGJ Online, Oct. 6, 2016; July 25, 2016).

RDMP

First announced in 2013, Pertamina’s refinery revitalization program’s RDMP specifically aims to upgrade the aging Balikpapan, 348,000-b/d Cilacap, 170,000-b/d Dumai, and 125,000-b/d Balongan refineries to:

• Process heavier, less-expensive crudes with a 2% sulfur content than the lighter, sweet crudes (0.4% sulfur content) they were originally configured to process.

• Increase the overall Nelson Complexity Index factor of the operator’s refining system to 8.9 from its current 5.4.

• Increase operational processing capacity up to 1.4 times from existing capacity.

• Increase fuel production.

• Improve the volume and quality of fuel production to conform with Euro 4 and Euro 5 standards from current Euro 2-quality standards.

• Increase system-wide refinery profitability to $7.90/bbl from $3/bbl (OGJ Online, May 23, 2016).

While a specific timeframe for startup of the Dumai RDMP has yet to be revealed, Pertamina has confirmed the RDMP Balongan and Cilacap projects are due for commissioning in 2023.

Still on schedule to be fully completed by 2025, however, the entirety of RDMP projects will increase Indonesian crude processing capacity to 2 million b/d from its current capacity of about 820,000 b/d.

Other revamps

In addition to RDMP projects, Pertamina has undertaken other projects as part of its refinery revitalization program, including the residual fuel catalytic cracking (RFCC) project and Project Blue Sky (PLBC) at the Cilacap refinery.

According to Pertamina’s latest annual report, strategic objectives of the RFCC Cilacap project—which produced first gasoline in November 2015 and reached official completion in 2017—included:

• Increasing production of RON 88 premium gasoline to 91 million b/d from 61 million b/d to achieve zero imports of high-octane mogas component (HOMC) RON 92.

• Increasing LPG production to 950 tonnes/day from 440 tonnes/day.

• Producing 430 tonnes/day of propylene.

• Increasing refining complexity to 6.0 from 5.4.

• Raising monthly production of premium gasoline by 730,000 bbl, HOMC by 200,000 bbl, and LPG by 31,000 tonnes.

Initiated in 2015 and still in its construction phase, the PLBC aims to improve quality of the refinery’s fuel products to RON 92 specifications from RON 88 via altering configuration of Cilacap’s naphtha processing complex. The PLBC is scheduled to be completed by yearend 2018, Pertamina said.

New refineries

Alongside revitalization projects at its existing refineries, Pertamina said it also plans to build two grassroots integrated refining and petrochemical complexes, each of which will cost $15-16 billion to complete, Pertamina said in early 2018.

The first project, a joint venture with Russia’s PJSC Rosneft, to be built at Tuban, in East Java, would involve construction of a 300,000-b/sd refinery configured to process imported volumes Russian ESPO and Iraqi Basrah, as well as other medium to heavy, sulfurous crude imports to produce feedstock for an associated petrochemical complex, the partners said (OGJ Online, May 27, 2016).

The Tuban refinery and integrated petrochemical plant are currently due to begin operation in 2024, Pertamina said.

Independently, Pertamina also continues to evaluate construction of a 300,000-b/sd in Bontang, East Kalimantan, that also would be integrated with some type of still-yet-to-be-identified petrochemical operation. The operator said it plans to collaborate with unidentified strategic partners on the project, two of which have responded positively to the proposed partnership and will soon participate in due diligence activities to advance the project.

Upon completing all RDMP, RFCC, PLBC, and grassroots integrated projects as currently planned, Pertamina said it expects to raise its total fuel production capacity to 1.3 million b/d by 2025.

Contact Robert Brelsford at [email protected].