PGN-PRPP Supply Natural Gas For Tuban Refinery

JAKARTA - Gas subholding PT Pertamina (Persero), PT PGN Tbk and PT Pertamina Rosneft Processing and Petrochemical (PRPP) signed a Head of Agreement (HOA) cooperation to supply natural gas to the Tuban Grass Root Refinery (GRR) Refinery, East Java.

PGN is ready to provide supporting infrastructure to supply natural gas to PRPP, either through land-based LNG terminals or pipelines and stations.

In his statement in Jakarta, Tuesday, it was stated that the signing of the HOA was carried out by PGN CEO M Haryo Yunianto, PRPP President Director Reizaldi Gustino, and PRPP Director of Finance & General Support Pavel Vagero, witnessed by Pertamina Managing Director Nicke Widyawati and Pertamina Logistics & Infrastructure Director Mulyono.

Pertamina President Director Nicke Widyawati said that the success of the Tuban GRR Project will have strategic value for Pertamina and Indonesia because it will become the first integrated refinery and petrochemical in Indonesia.

GRR Tuban will produce petrochemical products which are currently still dominated by imports. "With us already producing petrochemicals, this becomes Pertamina's business strategy in facing the energy transition in the future," he said.

Nicke also said that the construction of an integrated petrochemical refinery requires a large investment. Pertamina will try to reduce investment through integration, with which several utilities do not need to be built, it is enough by optimizing those already in the group, as well as reducing capex.

"From the Pertamina Group's perspective, this synergy is a synergy that must be mutually beneficial. We will use market price as a basis for making decisions and competitiveness. We also hope to encourage efficiency, because in the end when efficiency occurs it will increase profitability and be consolidated into the Pertamina Group. This is a step to make the Pertamina Group stronger going forward," Nicke said as quoted by Antara, Tuesday, April 19.

Pertamina's Director of Logistics & Infrastructure Mulyono also revealed that the construction of the Tuban GRR prioritizes efficiency.

"This is an extraordinary synergy as well as for efficiency in building a pipeline from GRR Tuban to TPPN of around three km," he said. The construction of this pipeline can reduce the cost of building three GRR Tuban tanks and two jetties.

"We will follow up as soon as possible in a definitive agreement and mutual support between Pertamina subholdings to accelerate the completion of the Tuban GRR ontrack, thereby providing benefits for national energy and creating a multiplier effect for the national economy," added PGN CEO Haryo Yunianto.

With a gas demand of 227 BBTUD in 2027 and 351 BBTUD in 2028-2046, PGN is fully committed as an aggregator for gas fulfillment for Tuban's GRR.

GRR Tuban is located 55 km from the Gresik-Semarang (Gresem) transmission pipeline. The Gresem pipeline is connected to the EJGP pipeline, the upstream pipeline in the East Java area, and the Kalija pipeline in Central Java, so that the integration of pipeline and LNG infrastructure can be carried out to distribute gas to the Tuban refinery. Pertamina Group in facing the current global economic and geopolitical challenges.

"Despite the development of the current global situation which is quite influential on Pertamina Group, we still ensure a no point of return to continue to realize the construction of the Tuban GRR Refinery which is projected to operate by the end of 2027," said PRPP President Director Reizaldi Gustino.

Reizaldi continued that the signing of the HOA is a real step for the synergy of the Pertamina Group, which will later have a positive impact in terms of optimizing capex and opex, environmental impacts, and maintaining the reliability of the Tuban GRR.

PGN and PRPP will manage the integration of the gas supply schedule to the Tuban GRR master schedule project, as well as identify gas fulfillment scenarios with the most optimal supply of Pertamina's LNG portfolio and piped gas.

For LNG supply, the PRPP refinery has provided land and will build a jetty to dock large ships including incoming LNGC. That way, the LNG supply scenario with a land-based LNG terminal mode is more feasible.

The construction of this integrated petrochemical refinery is also a mitigation of Pertamina's business risks going forward to make it more sustainable. When demand for fuel declines, Pertamina's refineries produce petrochemicals and build derivative infrastructure.