Developing LNG Infrastructure for Cilacap Refinery

Source: 5/25/2021, Location: Asia

To strengthen the country's energy independence and resilience, PT Pertamina (Persero) through Subholding Gas, Subholding Refinery, Subholding Shipping, and PT Badak LNG synergize to provide integrated Liquefied Natural Gas (LNG) infrastructure. It is to support Pertamina's refinery business development in Cilacap.

This project will supply gas with a gradual increase in volume (ramp-up) of 111 MMSCFD for 20 years to the Cilacap Refinery, implemented under the Small Scale Land Based Regasification Terminal scheme and is estimated to require an investment cost (Capex) of USD 151,7 million.

This collaboration is manifested in three Head Of Agreements (HOA) signed by President Director of PGN, M. HaryoYunianto, the Director of PT KilangPertaminaInternasional (KPI), Djoko Priyono, President Director of PT Pertamina International Shipping (PIS), ErryWidiasto, and the President Director of PT Badak LNG, GemaIriandusPahalawan, on Tuesday (25/05).

The signing was witnessed by President Director of Pertamina, NickeWidyawati, and Pertamina's Director of Logistics and Infrastructure Director Mulyono.

The agreement covers three scopes, namely, between PGN and KPI for the provision of LNG infrastructure. Between PGN and PT Badak LNG to provide LNG storage and breakbulking facilities. Between PGN and PIS for the utilization of LNG ships with a long-term time charter scheme or other LNG transportation schemes.

This cooperation is a milestone to strengthen mutually beneficial synergies between the sub-holding and holding Pertamina Group.

"We expect this collaboration to become an example for other Subholding that Pertamina Group will synergize and produce extraordinary benefits," said Pertamina's Director of Logistics and Infrastructure, Mulyono.

Mulyono also revealed that the project would develop the retail LNG market in southern Central Java and generate extraordinary efficiency reaching USD 58.5 million per year by utilizing gas.

The Cilacap refinery, one of 7 processing units in Indonesia, has a production capacity of 348,000 BSD. This refinery has a strategic value by supplying 34% of the national fuel needs or 60% of the fuel needs in Java Island. It makes the Cilacap Refinery the largest capacity refinery in Indonesia.

"As part of Pertamina's Oil and Gas Holding, PGN fully supports the business development of the PertaminaCilacap Refinery. This project is part of PGN's project priorities in providing an integrated LNG supply chain. Hopefully, with the availability of an integrated supply chain and LNG infrastructure, it can meet the gas needs at the Cilacap Refinery promptly," said President Director of PGN, M. Haryo Yunianto.

Haryo added, this synergy is PGN's support for Pertamina Group in managing the LNG portfolio, which can be optimized in the context of substituting Residual Fuel Oil (FRO) for gas-based fuels.

"This project is expected to grow the national economy, reduce imports, and reduce oil and gas balance deficit," said Haryo.

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