May 25, 2020 [The Jakarta Post] – State-owned oil and gas company Pertamina has agreed to join forces with state construction firm PT Nindya Karya and a South Korean consortium to explore business opportunities for a US$1.5 billion refinery development project in Dumai, Riau.

The memorandum of understanding (MoU) signed by representatives of the three parties on Wednesday marked progress in Pertamina’s plan to develop its major refineries as Indonesia works toward reducing oil imports and increasing domestic oil production.

“This $1.5 billion project would increase the domestic oil and fuel production capacity, which would consequently reduce our dependence on oil imports and trade deficits in the future,” Investment Coordinating Board (BKPM) chairman Bahlil Lahadalia said during the signing ceremony.

The MoU, which commissions a joint study on the Dumai refinery upgrade project, was signed by Pertamina megaprojects director Ignatius Tallulembang, Nindya Karya president director Haedar Karim and a representative of the South Korean consortium, DH Global Holdings Co. Ltd. chairman Jung Sam Seung.

The refinery upgrade is part of Pertamina’s Refinery Development Master Plan (RDMP) and Grass Root Refinery program.

The RDMP lays out a road map for upgrading four refineries: one in Dumai, Riau, one in Balikpapan, East Kalimantan, one in Cilacap, Central Java, and one in Balongan, West Java. The Grass Root Refinery program details the company’s plans to construct two new production facilities in Tuban, East Java, and Bontang, East Kalimantan.

The upgraded refineries’ total installed capacity will increase 38.2 percent to 1.21 billion barrels per day (bpd), while the new refineries will have a combined capacity of 600,000 bpd.

“We would like to express our gratitude to all parties who agreed to actualize the initiative. I hope the investment will have additional strategic value, as the oil price is currently under pressure,” Bahlil said.

Pertamina, through Ignatius, stated that the Dumai refinery upgrade project was prioritized.

“With this agreement, Nindya Karya and the South Korean consortium have become Pertamina’s strategic partners in conducting the study on the Dumai refinery upgrade. Our company hopes an important milestone can be achieved in December,” Ignatius said.

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