Indonesia’s Pertamina plans investment increase to double refinery capacity

A fuel truck passes storage tanks as it departs after loading its cargo at a state-owned Pertamina fuel depot in Jakarta, Indonesia. (Reuters pic)

JAKARTA: Indonesian state energy company Pertamina is planning capital expenditures of US$4.2 billion this year and will raise it to US$7 billion in two years as part of plans to double its oil refinery capacity, chief executive Nicke Widyawati said.

Pertamina is under pressure from the government to expand its downstream production to reduce imports of refined oil products, which creates a trade deficit that weighs on the Indonesian rupiah.

“Starting from 2021, we will invest around US$7 billion per year as these refineries (developments) are in progress,” Widyawati said in a meeting with journalists late on Thursday.

Pertamina plans to double its refining capacity to 2 million barrels per day (bpd) in 2026 from around 1 million bpd currently, Widyawati said, to meet national fuel demand of around 1.4 million bpd.

Pertamina expects to import 351,000 bpd of gasoline this year, up from 324,000 bpd in 2018, according to a company presentation during the meeting.

The company is currently working on at least seven refinery projects, including the new Bontang and Tuban refineries and the upgrading of the Balikpapan and Cilacap plants.

To finance the investment, Finance Director Pahala Mansury said Pertamina has the capacity to raise funds through borrowing, but the company is actively looking for partners for certain projects.

“We are looking for investment partners. These are big investments and the return may take a while,” Widyawati said.

Meanwhile, Pertamina is targeting US$58.85 billion in revenue in 2019, up from US$56.06 billion in 2018.