Pertamina-Rosneft Cooperation in Oil and Gas Sector

Downstream in Indonesia USD 12 billion for refinery and upstream in Russia

JAKARTA - PT Pertamina (Persero) with Rosneft to establish strategic partnership of cooperation in oil and gas sector. The cooperation with the downstream petroleum business building in Indonesia and oil drilling in Russia. 

Realization of cooperation Pertamina and Rosneft as a follow up of the signing of the Memorandum of Understanding (MoU) has been done before in Lenexpo in St. Petersburg, Russia in the event St. Petersburg International Economic Forum in mid June 2015. The cooperation covers areas of upstream and downstream, including gas and infrastructure, as well as the joint development of human resources in order to fulfill national energy needs.

Seriousness is also shown by Rosneft as a giant company that is strong enough in the world. Rosneft CEO specifically willing to come to Indonesia to meet with the Minister of Energy and Mineral Resources Sudirman Said and SOE Minister Rini Soemarno yesterday, Wednesday (27/42016).

In a meeting between the head of the company Pertamina president director Dwi Soetjipto and CEO of Rosneft, Igor Sechin with the Indonesian government, in this case the Minister of Energy and Mineral Resources (ESDM) Sudirman Said and Minister for State Owned Enterprises (SOEs) Rini Soemarno, the government signaled support plan of cooperation between the two companies both for upstream and downstream oil and gas.

In downstream, Indonesia state-owned energy firm Pertamina and Russia’s oil and gas company Rosneft are joining hands to develop an oil refinery in Tuban, East Java. The project, with a refining capacity of 15 MT, is estimated to require an investment of around $12 billion. Rosneft plans to become an investor to build an oil refinery in Tuban, East Java, Indonesia. Of some candidates, Rosneft is the strongest. SOE the Russian oil has advantages over other candidates.

“The cooperation between the two companies is very important, in particular, in guaranteeing the national energy security,” said the SOES Minister Rini Soemarno during the meeting with Rosneft Chairman Igor Sechin and Pertamina CEO Dwi Sutjipto.

Rosneft, have high levels of oil production of about 5.2 million barrels a day in which 50% of its production capacity is processed in the processing infrastructure Rosneft itself. The Russian company currently operates several refineries scattered in China, Germany, Italy, and the Netherlands.

Besides having a huge source of oil supply, also offers much to Pertamina. The main thing is the transfer of technology, Rosneft is willing to share their knowledge in building refineries. Rosneft also controls oil processing  technology is superior to modules that can be implemented to speed up Pertamina refinery project in Indonesia.

"The government has signaled its support for Pertamina and Rosneft to cooperate concretely from upstream to  downstream," said Wianda Arindita Pusponegoro ,, VP Corporate Communications of Pertamina.
The government also expects more concrete there is agreement in the near future, where the early stage focused on  efforts to ensure security of supply of oil to the refinery project.
"They have modules work processes that make him believe could accelerate the project refinery in Tuban, 7-8 months ahead," said Wianda.

Rosneft is also willing to help Pertamina to develop the human resources (HR) for the management of oil refineries.

"They also have human resources who are experts build and operate the refinery. From here he also offered if we want  the cooperation of human resources," he explained.

The Russian oil giant has also been found to be reliable in building an oil refinery. Rosneft already experienced  build and operate refineries in countries such as Russia itself, Italy, China, and others. High-flying, they believe  they can more quickly build a refinery in Tuban.

In addition to cooperation in the processing sector, Rosneft even invite Pertamina's upstream oil and gas business  in Russia. Currently the team of Pertamina had flown to Russia to see the potential in the oil and gas working areas  (blocks) offered Rosneft. Pertamina is now in the process of opening a data room upstream oil and gas assets in Russia's Rosneft.

"Hopefully in the near future there is a more concrete picture for cooperation Pertamina and Rosneft in the upstream business. They are very open, now our man of business development in Russia. The hope we can get into their assets,  "said Wianda.

Indonesia is a big market

The interest of SOES oil from Russia, Rosneft, to be investor build an oil refinery in Tuban, in cooperation with PT  Pertamina (Persero), because Indonesia is great for energy, and will continue to grow.

The seriousness is demonstrated by the arrival of CEO of Rosneft, Igor Sechin, directly to Indonesia and introduced by Pertamina president director Dwi Soetjipto to the Minister of Energy, Sudirman Said.

"Indonesia is a huge market, with 250 million people. Muslim country's largest and we also have Muslims in our  country. And we have some products internationally. We also cooperation as Vietnam. We supply oil to Singapore as  well," said Igor after meeting Minister of Energy and Mineral Resources at the Ministry of Energy and Mineral  Resources, in Jakarta, Wednesday (04/27/2016).

Igor said, petroleum products made from oil belongs to Rosneft also has been supplied to Indonesia. So it would be  better if Rosneft directly produce fuel in Indonesia.

Currently 61% of Rosneft shares owned by the Russian government. Parties Rosneft is negotiating with Pertamina  beginning of Tuban refinery construction project. The proposal has been given to Pertamina, and details of the  origin of the money and capital to be provided also been incorporated into the proposal.

Upstream in Russia

In addition to plans to build a joint refinery in Indonesia, Rosneft also offers Pertamina to invest upstream, which blocks the oil in Russia.

"(Rosneft) offer sharing in the upstream. We ducked in Russia, and it will improve the needs of upstream in Indonesia. We see demand that in Indonesia there must be energy security," said Pertamina President Director Dwi Soetjipto met at the Ministry of Enterprise, Jakarta, Wednesday (26/04/2016).

According to Dwi, within 2 weeks ahead, Rosneft is preparing an investment offer on oil and gas blocks under its management in Russia. Pertamina will send a team to Russia to finalize investments in the upstream.

"In two weeks it will be prepared Rosneft. Later we entered an exclusive agreement, so we will easily get the blocks that we are targeting. 2 This week we will soon be able to the data room, our team will be there, and the month is over," he said.

Pertamina has prepared an investment of US $ 3-4 billion for oil and gas blocks, including those offered Rosneft in Russia.

"I'll look at the data room first, Pertamina expressed interest. If the upstream investment of US $ 3-4 billion, if we prepare well 5 years is approximately US $ 12-15 billion," he concluded.