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Aramco, Pertamina Mull Joint Refinery
Reem Shamseddine | February 19, 2012

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A subsidiary of oil giant Saudi Aramco has signed a deal with state energy firm Pertamina in which it agreed to consider building a refining and petrochemicals project in Indonesia, the Middle Eastern company said on Saturday.

Saudi Aramco Asia said it was considering a refinery in Indonesia, among other refining projects, in a bid to raise its total global refining capacity to 8 million barrels per day within a decade as it seeks to balance its energy portfolio by increasing downstream investments.

Under the memorandum of understanding, Aramco and Pertamina will undertake a feasibility study to jointly build a refinery and petrochemicals project in Tuban, East Java.

The refinery would process 300,000 bpd of crude mainly supplied by Aramco via a long-term agreement to produce oil products and petrochemicals to meet rising demand in Indonesia and elsewhere in southeast Asia, Aramco said.

“This MoU is a significant first step in extending our already strong relationship with Pertamina and is also part of Saudi Aramco’s strategy to enhance its global downstream presence,” said Dawood M. Dawood, Saudi Aramco’s vice president of marketing, supply and joint venture coordination.

Aramco chief executive Khalid al-Falih has repeatedly said Aramco sees the refining business as a growth industry even as other companies are reducing their exposure. The oil firm sees the integration between refining and petrochemicals as boosting profitability.

Aramco did not say when the feasibility study of the project was due to be completed.

Reuters