Indonesia's state-owned oil company Pertamina has scrapped an agreement with Japanese company JX Nippon Oil on the upgrade of its Balikpapan refinery in Indonesia, citing high costs and the length of the project.
Pertamina planned to increase by 1/3 the capacity of its 220,000 bbl/d Balikpapan refinery, the second largest refinery in Indonesia, as part of Indonesia's plans to raise fuel output, process more domestic crude and reduce expensive imports. The companies failed to reach an agreement on the investment target, with JX Nippon Oil proposing an investment of more than US$5bn and its proposal taking up to three year longer than Pertamina's initial plans. Pertamina will now complete the first stage of the project (estimated at US$2.6bn) by itself in 2019. The Indonesian company will later review whether to seek another partner to complete the US$2bn second stage, aimed at meeting Euro IV emission standards.