Unlikely twins and differing fortunes: Malaysia’s Petronas and Indonesia’s Pertamina [DailyTimes] 09 Mar, 2019

On the southernmost edge of the Asian landmass and on the shores of the busy shipping lanes of the Singapore Strait, Malaysia’s Petronas is starting up a state-of-the art petroleum processing hub, called RAPID.The huge complex in Malaysia’s Johor province is currently testing its systems, running crude oil through its fuel processing units and labyrinth of pipes and producing large exhaust gas fires from its flare tower. The flames are clearly visible for miles around, including on Indonesian islands just across the narrow strait.The 300,000 barrels-per-day (bpd) RAPID or Refinery and Petrochemical Integrated Development will come onstream around May. Among other customers, it will sell fuel to Indonesia, shining a spotlight on the contrast between Petronas and its Indonesian peer Pertamina.Both are state-owned oil companies that dominate the energy sector in their own nations. But their fortunes have markedly diverged because Malaysia has allowed Petronas to follow its own growth path, while Pertamina is hobbled by Indonesian government intervention and bears the burden of a subsidy program.“Lots of people see Petronas and Pertamina as twin companies. But that’s not really the case. Petronas is very much a commercial company, almost like an independent oil company while Pertamina is driven more by government policy and agenda, a national oil company,” said Andrew Harwood, research director for Asia/Pacific upstream oil and gas at energy consultancy Wood Mackenzie.For Petronas, RAPID marks a milestone as it prepares for a future with less crude oil output while serving the region’s booming fuel demand.RAPID, being built in collaboration with Saudi Aramco, has cost around $15 billion and is one of Petronas’ biggest ever investments. It is part of an even bigger Pengerang Integrated Complex (PIC) being developed by more than 50,000 workers at an estimated cost of more than 100 billion ringgit ($24.61 billion), and which will eventually also include a deep-water oil and a liquefied natural gas (LNG) import terminal.Petronas declined to speak with Reuters about the project’s details but has said RAPID “will position Malaysia to capitalize on the growing need for energy and petrochemical products in Asia in the next 20 years … pushing our country into a new frontier of technology and economic development.”Pertamina is hobbled by Indonesian government’s intervention and bears the burden of a subsidy programLike Malaysia, Indonesia is struggling to keep oil production up just as domestic fuel demand soars.Once a member of the Organization of the Petroleum Exporting Countries (OPEC), Indonesia has seen its crude oil output dwindle from a peak of 1.6 million bpd in the early 1990s to below 1 million bpd. It is now Southeast Asia’s biggest fuel importer, importing more than 400,000 bpd of last year, at a cost of around $10 billion a year at current prices.Little investmentYet, the last time Indonesia built a major refinery was around 25 years ago.A Refinery Development Master Plan (RDMP), launched in 2014 to double refinery output to over 2 million bpd within a decade, was confirmed last week by Pertamina’s chief executive Nicke Widyawati.“Starting from 2021, we will invest around $7 billion per year as these refineries (developments) are in progress,” Widyawati said.But many of Indonesia’s refinery projects have suffered set-backs, like the delay in the upgrade of a refinery in the central Java area of Cilacap from 348,000 to 400,000 bpd. Due to be completed in 2021, it has been pushed back to 2023.Fajar Harry Sampurno, the deputy minister for state owned enterprises, said Cilacap’s delay was because the land for the site had yet to be acquired. March 9th 2019.

More News

US trade regulators approve Apple tariff exemptions

21 Sep, 2019 DailyTimes

>US trade regulators on Friday approved 10 out of 15 requests for tariff exemptions filed by Apple Inc amid a broader reprieve on levies on computer p ... Detail

Exxon Mobil, Shell among groups to build 5 Pakistan natural gas terminals

21 Sep, 2019 DailyTimes

>Pakistan has approved the construction of five liquefied natural gas (LNG) terminals by groups that include Exxon Mobil Corp. and Royal Dutch Shell, ... Detail

Mideast tensions push oil prices toward biggest weekly gain in months

21 Sep, 2019 DailyTimes

>Oil prices were on track to jump more than 7 percent this week, their biggest weekly rise in months, as early trading on Friday saw gains extended on ... Detail

CPEC to bring about socioeconomic benefits to people, says Bakhtyar

21 Sep, 2019 DailyTimes

>Federal Minister for Planning, Development & Reform Makhdum Khusro Bakhtyar has said that the ongoing phase of China-Pakistan Economic Corridor ( ... Detail

ABL achieves PCI — DSS 3.2.1 certificate of compliance

21 Sep, 2019 DailyTimes

>Allied Bank Limited, one of the leading financial institutions in Pakistan, has achieved the PCI-DSS (Payment Card Industry Data Security Standard) v ... Detail

Post Your Comments
Type your Comments / Review in the space below.
Verify Code