JAKARTA (RambuEnergy.com) – Indonesian state-owned energy company PT Pertamina has appointed Oman’s Overseas Oil and Gas LLC (OOG)-led consortium as preferred winner to develop the US$10 billion worth of the grassroots Bontang Refinery project, located in East Kalimantan. OOG teamed up with Cosmo Oil International Pte Ltd (COI), a trading arm of Cosmo Energy Group of Japan, in the consortium.
The consortium was picked after going through a selection process which began in January 2017. Initially, as many as 100 companies showed interest, during the project expose. In the final phase, the number of potential candidates was reduced to just 8.
Pertamina said the consortium will hold majority stake of 90% in the project, while Pertamina only holds 10% equity. Pertamina will not inject cash, instead land and fixed assets as equity. As a consequence, all financing needs of the project will come from the consortium. Pertamina reserves the right to supply 20% of the oil needed by the Bontang project.
Pertamina also does not guarantee that it will become the off-taker of the output of the Bontang Refinery. Nevertheless, Pertamina will provide support in the joint marketing efforts.
OOG was selected as preferred bidder because OOG is fully backed by the Oman government in financing the mega refinery project. OOG also guarantee the crude oil supply for the refinery and the fact that the compay ties up with strategic partner COI for technical support and product marketing.
The Bontang Refinery is designed to yield 300,000 barrels of fuel per day, and is expected to create 20,000 new jobs during construction and 1,600 when starting up operations. The fuel produced by Bontang Refinery will meet the Euro 5 standard, according to Pertamina.
In the next phase, Pertamina and OOG will sign a Framework Agreement, to be followed by a Feasibility Study which is scheduled to be completed by mid-2019. Then the winner will enter the Front-end Engineering Design (FEED) phase, a crucial phase before construction starts, which is set to be completed by end-2020.
The Bontang Refinery project is scheduled to start commercial operation by 2025.
Pertamina currently embarks on developing grass-root refinery projects as well as upgrading the aging existing refineries as a move to boost the country’s fuel production capacity to 2 million barrels per day, from around 1 million barrels per day at present.
Earlier, Pertamina has set up a partnershiop with Rosfnet of Russia to develop Tuban grass-root refinery. The two parties have set up a joint venture and are now conducting a feasibility study. (*)