Pertamina called on to explain Balongan refinery problems
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)