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Pertamina has high hopes for renegotiations with Saudi Aramco and Rosneft

15 June 2017 , 14:20Nefetgaz.RU287

State-owned indonesian energy firm Pertamina has stated on June 14, 2017, that it could reduce some of its financial burden should renegotiations go well with Saudi Aramco and Rosneft for the development of 2 major refinery projects.

 

Pertamina has signed a joint venture agreement with Saudi Aramco for the Cilacap refinery upgrade with a total investment value of around $5.8 billion.

 

Meanwhile, Pertamina will also team up with Rosneft to develop the new Tuban refinery, projected to cost $15 billion.

Both projects are located in East Java.

 

Pertamina has a majority 55 % stake in both projects.

Due to negative operating cash flow, Pertamina has tried to renegotiate with Aramco and Rosneft, asking them to conduct joint marketing efforts instead of making Pertamina the sole off-taker for oil produced at the refineries.

 

That way, the off-take agreement will be in line with the shares portion of each party involved.

«Yes, this could [reduce our burden] because the problem is in the off-take agreement,» Pertamina president director Elia Massa Manik said in Jakarta on June 14, 2017.

 

Meanwhile, Fitch Group’s BMI Research has estimated that Indonesia will continue to remain the largest net importer of refined fuels in Asia following financial constraints faced by Pertamina.

«We note that failure to secure joint-venture partners to share the cost burden will exert a significant drag on the firm's finances for years to come,» BMI Research stated.

 

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