Saudi Aramco - Petarmina on Refining and Petrochemical Project (S. Wahab)

DHAHRAN: Saudi Aramco Asia Co. Ltd. (SAAC), a subsidiary of Saudi Aramco, has signed a memorandum of understanding with Indonesia's Pertamina to evaluate the economic feasibility of building an integrated refining and petrochemical project in Indonesia.

"The proposed refinery and petrochemicals project in Tuban, East Java, will be designed to process 300,000 barrels per day of crude oil," Saudi Aramco said on its website on Saturday.

"Much of the crude oil will be supplied by Saudi Aramco pursuant to a long-term contract ... and (the refinery) will produce high-quality refined petroleum and petrochemicals products to meet rising demand in Indonesia and elsewhere in Southeast Asia," said Saudi Aramco.

The project represents an opportunity for Saudi Aramco to partner with Pertamina, Indonesia's state oil and gas company and to capitalize on investment opportunities in Indonesia's growing downstream industry. It extends the close cooperation between Saudi Aramco and Pertamina and increases prospects for industrialization and economic diversification in Indonesia.

"This memorandum of understanding is a significant first step in extending our already strong relationship with Pertamina," said Dawood M. Dawood, Saudi Aramco's vice president of marketing, supply and joint venture coordination. "It is also part of our strategy to enhance our global downstream presence."

He said Saudi Aramco is committed to making win-win investments with partners for projects that yield mutual benefits and contribute to economic growth and development.

"This cooperation in investment with Saudi Aramco is of the highest value for both Pertamina and the Republic of Indonesia to strengthen the fuel and petrochemical supply and to satisfy the huge domestic demand now and for the future," said M. Afdal Bahaudin, Pertamina's director for investment planning and risk management.

"Pertamina fully supports our partner to make a successful project that is beneficial to both parties and that further strengthens our cooperation with Saudi Aramco," he said, and added: "The Tuban refinery and petrochemicals project is part of Pertamina's plan to improve Indonesia's energy security."

Following the signing of the memorandum of understanding, a project team will work on the next phase of the project, which will consist of a joint scoping study that will include market research, configuration studies and economic analysis.