Pertamina loses $30.7m in production stoppages

JAKARTA (JP): State oil and gas company Pertamina said on Tuesday it had suffered a loss of US$30.7 million over the past four years due to production stoppages at its giant refinery in Balongan, West Java.

Pertamina president Soegianto said the refinery's residue catalytic cracker (RCC), which produced liquefied petroleum gas (LPG) and the Premium, Super TT and Premix gasoline brands, had stopped production for a total of 249 days since it started operating in late 1994, due to technical problems.

In addition to losing potential sales of US$30.7 million, Pertamina had also been forced to spend $2.2 million plus Rp 4.8 billion on repairing the cracker, Soegianto said.

"But, we and our consultants have completed the technical audit on the refinery and we hope to thoroughly repair the refinery during its overhaul in July 1999," Soegianto said during a hearing between the Ministry of Mines and Energy and House of Representatives Commission V for mines and energy, industry and trade, investment, cooperatives, manpower and the environment.

Pertamina's consultants are the United States designing and engineering company Universal Oil and British Petroleum.

The US$2.45 billion Balongan refinery was built by Pertamina with contractors JGC Corporation of Japan and the U.S.'s Foster Wheeler from 1990 to 1994.

Project financing was provided by Java Petroleum Investment Co. Ltd. -- a consortium grouping Mitsui Corp. Marubeni Corp. Sumitomo, Itochu and 20 Japanese banks.

The refinery was initially designed to supply export markets, which is why it is also called the Exor (export oriented) I Balongan refinery.

Designed with a processing capacity of 125,000 barrels per day (bpd) of crude oil, the refinery has two production units: the so-called crude distillation unit (CDU) and the RCC.

The CDU processes crude oil into naptha, kerosene, automotive diesel and residue; and RCC turns the residue from CDU into LPG and Premium, Super TT and Premix gasoline.

The refinery's RCC is billed as the world's biggest with a processing capacity of 83,000 bpd, compared to other RCC units in the world which have a capacity of between 30,000 and 40,000 bpd.

But the number of breakdowns has led analysts to speculate that its construction is off-spec.

They believe Pertamina's officials marked up the prices of materials used for the refinery's construction.

Soegianto explained the refinery's RCC first experienced failure on Dec. 27 1994, several days before it was scheduled to be inaugurated by former president Soeharto.

The failure forced the refinery to stop production for 96 days.

The cracker stopped production again for 26 days from Feb. 6, 1997 and for 127 days from February this year.

According to its design, the cracker should be able to operate for two years before taking a scheduled 40-day break.

Minister of Mines and Energy Kuntoro Mangkusubroto has requested the Attorney General and the State Comptroller Agency to conduct a legal and financial audit respectively on the refinery.

Kuntoro recently said both agencies were expected to submit the results of their investigations to him next month. (jsk)