Pertamina called on to explain Balongan refinery problems
JAKARTA (JP): State oil and gas company Pertamina should explain the reasons behind chronic production problems at its US$2 billion Balongan refinery in West Java, an energy analyst said yesterday.
Iskandar Mandji, a former member of the House of Representatives, told The Jakarta Post the ongoing production problems at the Balongan refinery and Pertamina's unwillingness to explain their reasons had created a public perception that the refinery was an inefficient and corrupt venture.
Iskandar made the statement following a report that the refinery was shut down Monday for an indefinite period of time due to an alleged technical problem at its residue cracking unit.
Pertamina has repeatedly shut down the refinery due to alleged technical problems since the facility started operation in March 1995. The last shutdown took place two months ago.
"What actually happens there? Some people blame the production problems on faulty construction. But others say Pertamina intentionally shuts down the refinery every now and then to allow more imports of fuel so that the fuel importers can get more profits," Iskandar said.
Pertamina data indicates fuel imports are monopolized by PT Perta Oil Marketing Ltd., which is 30 percent owned by Pertamina and 70 percent owned by its joint partners, including the Humpuss group controlled by President Soeharto's son Hutomo Mandala Putra. Several foundations linked to top political leaders control the remaining shares.
Indonesia still imports between 15 percent and 20 percent of its annual consumption of 52 million kiloliters due to the limited capacity of Pertamina's refineries.
Pertamina has nine refineries located in Pangkalan Brandan in North Sumatra, Dumai and Sungai Pakning in Riau, Musi in South Sumatra, Balongan in West Java, Cilacap and Cepu in Central Java, and Balikpapan in East Kalimantan. The refineries have a total capacity of about one million barrels per day (bpd) of crude oil.
The Balongan refinery was constructed by a group of contractors, including Japan's JGC Corporation, Foster Wheeler of the United States and the Far East Trading Corp., an affiliate of Pertamina. The construction of the refinery started in 1990.
Financing for the project was provided by Java Petroleum Investment Co. Ltd. -- a consortium grouping Mitsui Corp., Marubeni Corp., Sumitomo, C Itoh & Co. (now Itochu) and 20 Japanese banks.
The refinery, which has a processing capacity of 125,000 bpd of crude oil, is designed to produce 136,000 metric tons of liquid petroleum gas (LPG) per year, 186,000 metric tons of propylene a year, 54,500 bpd of aviation gas, 24,500 bpd of automotive diesel oil, 14,890 bpd of industrial diesel oil and 72 metric tons of sulfur per day.
The refinery's inauguration by President Soeharto, scheduled for Jan. 1995, was delayed for two months due to damages created during its trial operation.
A Pertamina official who asked for anonymity said yesterday the production problems at the refinery were due to initial design problems.
He said the refinery may have been built with low-quality construction materials because Pertamina officials supervising the project wanted to rake in illegal cost savings.
Pertamina spokesman Ramly Djaafar said he did not know the reasons behind the Balongan refinery's production problems.
"The refinery is still new, very sophisticated, but strangely it often experiences production problems, different from other refineries which are older than it. I don't know the reasons," he said. (jsk)