Pertamina to upgrade two lubricant plants

Moch. N. Kurniawan, The Jakarta Post, Jakarta

State-owned oil and gas company Pertamina said on Wednesday it planned to invest some US$30 million to upgrade two lubricant plants in the next two years in order to improve their efficiency.

Pertamina's general manager for lubricant units Poernomo said that the two lubricant plants, located in Jakarta and Surabaya, needed upgrading because they were already too old and had high operating costs.

"We need to repair the plants ... it's part of our program to reduce the operating costs," he told The Jakarta Post on the sidelines of a seminar on automotive fuels and lubricants.

Pertamina operates three lubricant plants, or lube oil blending plants, with a total processing capacity of 500,000 kiloliters.

Last year, Poernomo said, Pertamina's profit from lubricant sales reached about Rp 500 billion ($54 million).

According to him, Pertamina controlled about 60 percent of the total 600,000 kiloliters of lubricant sales in the country in 2001.

"This year, we want to at least maintain last year's profit," he said.

The lubricants market in the country was liberalized by the government last year.

Separately, Pertamina's spokesman M. Harun told the Post that Pertamina was moving ahead to upgrade its Balongan and Cilacap refineries, in West Java and Central Java respectively, to produce clean fuel in line with the government's "Blue Sky" program.

Through the "Blue Sky" program, the government aims to phase out leaded gasoline.

He said Pertamina had to upgrade its refineries to boost high- octane mogas component production (HOMC), a commodity that is needed to replace the environmentally unfriendly chemical tetra ethyl lead (TEL) as an octane booster in cars.

At present, the government has implemented an unleaded gasoline policy in several cities such as Jakarta, Cirebon and the surrounding areas. It expects to implement the policy throughout the country in 2004.

Harun said Pertamina would invest about $250 million in upgrading the two refineries.

For the Balongan refinery upgrade, Pertamina started the engineering, procurement, and construction (EPC) tender last month and would announce the winner in June.