Capacity hike to cut Indonesian product imports

OREANDA-NEWS. October 05, 2015. Indonesia's oil product imports are expected to fall back with increased domestic production capacity, which will reduce its reliance on gasoline from overseas.

The restart of the 100,000 b/d Trans Pacific Petrochemicals Indotama (TPPI) condensate splitter at Tuban and the debut of a 62,000 b/d residual fluid catalytic cracker (RFCC) at the 348,000 b/d Cilacap refinery will cut Indonesia's fuel import by 30pc, said Indonesia's state-owned oil company Pertamina. Indonesia imports about 9mn-10mn bl of gasoline each month, mostly the 88R grade, for domestic consumption.

Assuming "optimum" operations of 30,000 b/d at Pertamina's Cilacap RFCC and 61,000 b/d at TPPI, Pertamina could reduce imports of 88R gasoline by 91,000 b/d, according to the oil firm.

TPPI in east Java was scheduled for a restart in early October after being shut since June 2014, following a third-party processing agreement struck with Pertamina. It will operate at 20,000 b/d initially, with TPPI targeting to increase this to 80,000 b/d of production in November, depending on feedstock availability.

The Cilacap RFCC, in central Java, is to start commercial operations by the end of the second week of October, according to Pertamina.

Pertamina has also committed to absorb 1mn l (6,290 bl) of fatty acid methyl ester (FAME) until the end of the year. It will absorb 5.14mn l next year. FAME is a type of biofuel produced from methanol and vegetable oils.

This is a boost for biodiesel producers in Indonesia, which have been in limbo following the slump in crude prices. The absence of major biodiesel producers in Indonesia has resulted in methanol prices dropping to about \\$248/t cfr southeast Asia, the lowest level since at least January last year.

Increased absorption of biodiesel by Pertamina is expected to increase methanol consumption by biodiesel producers. About 130,000t of methanol consumption is expected for biodiesel production in this year's fourth quarter, a sharp increase compared with low production seen so far this year

The Cilacap RFCC also has the potential to tip Indonesia's propylene balance. Pertamina will have about 180,000 t/yr of propylene surplus with the RFCC starting up. With domestic consumer Chandra Asri expanding its propylene production capacity through debottlenecking to 470,000 t/yr from the current 320,000 t/yr, it will only need about 10,000 t/yr of propylene to run its 480,000 t/yr polypropylene plant at full rates.

Pertamina is expected to issue a tender for a 2016 propylene contract this November to sell the 180,000 t/yr surplus propylene, divided into two equal packages of 90,000 t/yr.