Pertamina & SK Corp to build lube base oil plant

Indonesia's state-owned oil and gas company PT Pertamina had signed head of agreement (HOA) with South Korea's SK Corp to build a lube oil plant in Indonesia with total investment around US$150 million.

Widya Purnama, Pertamina president director, said both companies signed the HOA early this month in Hong Kong. Widya didn't disclose the financial arrangement for the project.

While no details of the plan, ground breaking ceremony for the construction of the plant in Dumai, Riau province, is slated on April 2006, Investor Daily reported today.

Late last year, Antara reported that the plant will be have capacity to make 350,000 metric tons of Group III oils per year (6,800 barrels per day), mostly to serve local market and exports. Pertamina operates a 120,000-b/d fuels refinery in Dumai. The company is Indonesia’s largest producer of finished lubricants and currently makes Group I base oils at its refinery in Cilacap. That base oil plant, Pertamina's only, has capacity of 8,600 b/d.

Meanwhile, SK is the world’s largest producer of Group III base oils. The company has two plants at its massive oil refining complex in Ulsan, South Korea, with total capacity of 17,000 b/d, including 14,000 b/d of Group III. The company opened the second plant in July of 2004 and officials said at that time that they were already contemplating another project outside of South Korea. SK and fellow South Korean refiner S-Oil have brought large volumes of Group III to the global market in recent years and found robust demand for them.

Other companies have announced plans to build Group II and Group III plants. Most are in the Pacific Rim, including projects announced by Malaysia’s Petronas, Taiwanese refiners Chinese Petroleum Co. and Formosa Petrochemical, and South Korean joint venture GS-Caltex.

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