Jakarta (VNA) - Taiwanese state-owned oil refiner CPC Corp. has pledged to invest 22 billion USD in the development of the Balongan petrochemical refinery, said Coordinating Minister for Maritime and Investment Affairs Luhut Binsar Pandjaitan.

In 2018, the company and Indonesia’s oil and gas holding PT Pertamina signed a 6.49 billion USD framework agreement for the project.

Under the deal, the two sides will cooperate in building an oil refinery with an annual capacity of at least 1 million tonnes of ethylene and a downstream unit that will produce other refined derivative products to meet the needs of the world industry, especially in Indonesia.

Several components of the project will start this year, including completing a pre-feasibility study (FS), starting a bankable feasibility study (BFS), environmental impact assessment (EIA) and land reclamation. The refinery is expected to start operating in 2026, Pandjaitan said.

Currently, Pertamina‘s petrochemical processing capacity is only 700 kilotons per annum (ktpa). However, its capacity will increase gradually as the refinery megaproject is completed, consisting of two new refineries Tuban and Bontang, and four revitalized refineries namely Balikpapan, Cilacap, Balongan, and Dumai.

“In 2026, we will be able to produce around 6,600 ktpa of petrochemical products,” the minister said, adding the country spends 3 billion USD per year to import oil and gas which is almost 70 percent of the country’s national needs.

Previously, the Abu Dhabi National Oil Company (ADNOC) has signed a deal with Pertamina for oil and gas collaboration in both countries. As a part of the 2.5 billion USD deal, the two companies will collaborate in building a liquefied petroleum gas (LPG) storage facility in Indonesia./.