PT Pertamina, through subsidiary PT Kilang Pertamina Internasional (KPI), and Russian Rosneft Oil Company, through affiliate Petrol Complex PTE LTD, signed a document to establish a joint venture: PT Pertamina Rosneft Processing and Petrochemicals (PRPP).
The joint venture will build and operate a new oil refinery to be integrated with the new grass root refinery (NGRR) and petrochemical complex in Tuban District, East Java Province.
According to a press release received by ANTARA here on Tuesday, the document was inked at the Office of the Investment Coordinating Board (BKPM) in Jakarta on Tuesday.
KPI Director Achmad Fathoni Mahmud noted that under the framework of developing the 300 thousand barrels per day capacity Tuban NGRR, with a total investment value of up to Rp15 billion (US$1.1 million), the two companies agreed to share 55 percent of PRPP`s stocks with state-owned oil and gas company Pertamina and 45 percent with Rosneft.
According to Mahmud, the Tuban NGRR project will offer huge economic and social benefits to the local people and countries in future.
“This project will increase Indonesia`s energy independence and resilience by increasing the production of national fuel oil of Euro V standard. The refinery will also produce new petrochemical products,” he explained.
Mahmud remarked that the construction of the Tuban NGRR megaproject will create 20 thousand to 40 thousand jobs during the construction phase and some two thousand jobs once it becomes operational.
The project is also believed to boost taxes earned by the government and improve the people`s welfare.
Fuels to be produced by the Tuban NGRR are gasoline, at 80 thousand barrels of per day; diesel, at 99 thousand barrels per day; and aviation fuel, at 26 thousand barrels per day.
Meanwhile, the new petrochemical products to be manufactured annually are 1.3 million tons of polypropylene, 0.65 million tons of polyethylene, 0.5 million tons of styrene, and 1.3 million tons of paraxylene.
The board of directors of PRPP are Amir H. Siagian as the president director as well as Alexander Dmitriev and Bambang Sembodo as the directors.
Deputy for Investment Services of the BKPM Lestari Indah explained that the board strongly supported the establishment of the Indonesian legal entity on behalf of PT PRPP of Pertamina and Rosneft.
“The establishment of PT PRPP in the oil refinery business will help to generate up to 40 thousand jobs as part of the implementation of the National Strategic Project that is expected to balance the demand and supply of oil and gas and to have a positive impact on Indonesia`s economic growth,” Indah said.
Indah admitted that the Indonesian government, through the BKPM, is tasked with ensuring that the establishment of PT PRPP, through the three-hour investment service mechanism, is implemented optimally and becomes immediately operational as an Indonesian legal entity.