This will become Pertamina's business strategy in facing energy transition in future
Jakarta (ANTARA) - State-owned gas subholding company PT PGN Tbk and PT Pertamina Rosneft Processing and Petrochemical (PRPP) signed a Head of Agreement (HOA) on natural gas supply to East Java's Tuban Grass Root Refinery (GRR) refinery.

PGN is ready to provide supporting infrastructure to supply natural gas to PRPP, a subsidiary of state-run oil and gas firm PT Pertamina, either through land-based LNG terminals or pipelines and stations, it noted in a statement here on Tuesday.

The agreement was inked by PGN CEO M. Haryo Yunianto, PRPP President Director Reizaldi Gustino, and PRPP Director of Finance & General Support Pavel Vagero.

Pertamina President Director Nicke Widyawati stated that the Tuban GRR project will become the first integrated refinery and petrochemical industry in Indonesia.

It will produce petrochemical products that are currently still dominated by imports.

"This will become Pertamina's business strategy in facing energy transition in future," she stated.

Widyawati pointed to the need for huge investment in the integrated petrochemical refinery construction work. However, Pertamina will strive to lower the cost by optimizing existing utilities.

"From the Pertamina Group's perspective, this synergy must be mutually beneficial. We will use the market price as a basis for making decisions and competitiveness. We also hope to encourage efficiency, as efficiency will increase profitability. This is a step to make the Pertamina Group stronger going forward," she affirmed.

PGN CEO Haryo Yunianto stated that the company would follow up the agreement as a form of mutual support between Pertamina subholdings to accelerate the completion of the Tuban GRR.

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Hence, the project will provide benefits for national energy and create a multiplier effect for the national economy, he added.

With gas demand expected to reach 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 pipeline and LNG infrastructure integration can be conducted to distribute gas to the Tuban refinery.

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Gas supply from Tuban's refinery is expected to increase the efficiency of Pertamina's refineries and enhance the economic value of the Pertamina Group in facing the current global economic and geopolitical challenges.

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

PGN and PRPP will manage the integration of gas supply to the Tuban GRR project master schedule 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 the Liquefied Natural Gas Carrier (LNGC).

Construction of the integrated petrochemical refinery is also a mitigation of Pertamina's business risks to make it more sustainable.

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Translator: Kelik Dewanto, Sri Haryati
Editor: Fardah Assegaf
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