Saudi Aramco could reduce stake in $5.5bn Indonesia refinery project

25/08/2016 05:34 AST

Oil and gas giant Saudi Aramco may reduce its stake in a proposed $5.5 billion refinery project in Indonesia, the country's energy minister said.

Aramco has asked to cut its share of the project to upgrade a refinery in Cilacap in the province of Central Java to 30 per cent from 45 per cent, interim energy minister Luhut Pandjaitan told reporters.

Such a move could be a setback to President Joko Widodo's plans to overhaul the creaking energy infrastructure in Southeast Asia's largest economy.

Pandjaitan added that state energy company Pertamina, which is jointly developing the facility, would likely absorb the difference.

"Aramco's progress has been rather slow. We want to chase this, not just talk. We want something concrete now," he said.

Indonesia hopes to formalise a joint venture and other details of the partnership between Aramco and Pertamina during a visit from Saudi King Salman bin Abdulaziz to the archipelago in October.

"We will finalise this as best we can first, and we hope this will have a positive impact for everyone, primarily the Indonesian public," Pertamina spokeswoman Wianda Pusponegoro told Reuters, referring to the partnership with Aramco.

However, Pusponegoro noted that the company had not received official notification of any Aramco proposal to reduce its proposed stake.

Aramco declined to comment. Forecasting growing crude oil demand, Aramco has been looking to invest further in Indonesia's refining and petrochemicals sector, part of broader expansion plans in China, India, Vietnam and the United States.

The Cilacap upgrade is expected to increase the refinery's crude processing capacity to 370,000 barrels per day (bpd) from 348,000 bpd at present, and is targeted for completion by the end of 2022.

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