INEFFICIENCY IN BALONGAN EXOR I OIL REFINERY

SPOTLIGHTED AGAIN.
The operation of Pertamina's oil refineries is not yet efficient. Expect that there are several basic
changes that can be added to a commercial
centrifugal or positive displacement pump. Beginning with pumps that have overhung impellers,
moving to a solid shaft is a desirable change in relation to typical sleeved shafts. Mechanical seals
should be enhanced by using silicon carbide faces, and elastomers are able to be changed to EPDM.
Furthermore, magnetic bearing protectors will be a vast improvement in relationship to the lip seals
which nearly all industrial pumps use to keep bearing sump oil clean.
Independent audit firm Pricewaterhouse Coopers (PWC) said losses because of emergency shut
down of Pertamina's oil refineries reached US$ 43 million in 1997-1998. Balongan Exor I in
Indramayu, for example, has been reported to suffer troubles hanpering its operation. The plant has
stopped operation for 249 days so far including 96 days in 1994, 26 days in 1997 and 127 days in
1998.
The damage that caused the grounding of the Balongan refinery for 96 days in 1994 was in the
residual catalytic cracking (RCC) wet gas compressor trip. The cost of repair totaled Rp 763.18
million and US$ 1.77 million. Two years later on February 6, 1997 there was damage in the Dipleg
Cyclon Reactor the repair of which costed Rp 980.7 million. In February-July 1998, there were
troubles, such as in the RCC fuel gas slide valve SLV-105 the repair of which costed Rp 19.7 million
and US$ 402,000; and then leak in the RCC catalyst cooler tube and hot spot shell regenerator, the
repair of which costed Rp 3 billion. The total loss suffered by Pertamina as a result of the grounding
of the Balongan Exor I totaled US$ 30.7 million.
The damage was traceable to the early process of the project construction. In the beginning,
Pertamina rejected an investment plan by a consortium as the price was too high, but former Mines
and Energy Minister Ginanjar Kanasasmita did not agree with the rejection by Pertamina. Finally
after protracted negotiations, the contract price was reduced to US$ 1,999 million.
Until now the mines and energy minister has not received the report as it is still being studied by
BPKP and the attorney general. Former chief executive of Pertamina also acknowledged that
investigations have been made of the cases of at least 20 Pertamina's officials involved in the
construction of Exor-I
Supplied by Caltex
The main goal of the construction of Exor-I is to cope with the difficulty in the marketing of Duff
crude oil from horizontal centrifugal pump Riau and to increase the additional value of oil products.
The mill was designed to process crude oil from Duff (100,000 barrels per day) and Minas (25,000
bph) both owned by Caltex Pacific Indoensia (CPI). The Exor-I refinery has a processing capacity of
125,000 bph. It started operation in 1994.
The products of fuels and non fuels from Balongan Exor I are for supply in Jakarta and West Java
replacing supplies from Dumai and Balikpapan.
Investment worth US$ 2.1 billion
The project construction was carried out by JGC Corp. from Japan and Foster Wheeler from Britain
as the main contractors and a number of local contractors. The project was financed with non
resource freaking with the advance payment system under which the loan is to be repaid with the
sales of the products. The system is based on product off take agreement with British Petroleum
with a take or pay clause. The financer was JAPIC (Java Petroleum Investment Co.), which is a
consortium of Japanese companies -- Mitsui Co. Ltd, C. Itoh, Toyo Menka, Sumitomo, Nissho Iwai
and Marubeni. The total cost was US$ 2,138 million including US$ 1.85 billion provided by the
contractors and US$ 282.1 million by Pertamina.
The loan was for 12 years, but in 1996, there was a prepayment of US$ 1,163 million. The
repayment, therefore, was expected to be settled $ years earlier from 2007 to 2002. It was reported
that starting the first semester of 1997/1998, the refinery began to post profit. According to design
Exor-I produces oil fuels, non fuels and sulfur flake. Under full operation, the refinery's production is
as shown in the following table.
Table - 1 Production capacity of Exor-I in Balongan, 1999
Type of product Prod. capacity
(Barrel per day)
LPG 4,900
Propylene 6,100
Regular Mogas 51,350
Kerosene 10,600
Gasoil 23,850
Industrial Diesel Fuel 14,000
Fuel Oil 3,850
Decant Oil 4,250
Sulfur Flake 24(*)
(*) ton per day
Source: Pertamina/Data Consult
Maintenance of Pertamina's oil refineries handled by PT Elnusa Harapan
In 1999, there are 2 Pertamina's refineries experiencing shut down -- the Cilacap refinery shot down
for 29 days ending in May and Exor-I in Balongan for 70 days starting July 29, 1999. The shut down
resulted in the need to import larger volume of oil fuels.
Other factor of inefficiency of Pertamina is the fact that the state company often hands over jobs to
other companies. For example, it has handed over the maintenance of its refineries to PT Elnusa
Harapan, which is 51.5% oned by Pertamina and 48.5% by PT Tri Daya Esta, a company owne dby
Bambang Trihatmodjo. In practice PT Elnusa did not handle the job directly but it handed over the
job to a subcontractor, its subsidiary PT Elnusa Petro Teknik (EFT), which holds the contract for the
maintenance of the Dumai refinery, Balikpapan refinery and Sorong refinery. Since April 1, 1998,
EPT handled the maintenance of all refineries owned by Pertamina. The maintenance cost could
have been reduced by at least Rp 7.2 billion so far if Pertamina directly offered the job to EPT
without the intermediary of PT Elnusa Harapan.
Table - 2 Installed capacity of Pertamina's refineries, 1998 - 1999
Refineries Province Sources of crude oil
Domestic
Pangkalan Brandan North Sumatra Rantau
Dumai/S. Pakning Riau Minas, Duri,
Lalang, Peudada,
Lirik
Musi South Sumatra Minas, Duri,
Ramba, Jene
Cilacap Central Java Minas, Duri,
Arjuna, Handil,
Walio, Badak
Balikpapan East Kalimantan Tanjung, Handil,
Sepinggan, Bekapai,
Attaka, Badak,
Madura, Lalang,
Sangata, Minas,
Duri, Arjuna, Kakap,
Belida, Widuri
Exor I Balongan West Java Duri, Minas
Kasim Irian Jaya Walio Mixed
Cepu Central Java --
Total
Refineries Sources of crude oil Installed capacity
(NASD*)
Import 1998 1999
Pangkalan Brandan -- 5.0 5.0
Dumai/S. Pakning
-- 170.0 170.0
Musi
ALC 132.5 133.7
Cilacap
ALC 300.0 348.0
Balikpapan Tapis (Malaysia), 253.6 260.0
Jabiru & Cooper Basin
(Australia), Sarir (Libya),
Nanhai & Xijiang (China),
Nigerian Brass & Pennington
(Nigeria), Baho (Vietnam),
Arabian Superlight
& Sahara Blend
(Middle East)
Exor I Balongan -- 125.0 125.0
Kasim -- 10.0 10.0
Cepu -- 3.8 3.8
Total 993.7 1,055.5
Note: MBSD = Metric Barrel per Stream Day
Source: Pertamina/Data Consult
Imports of oil fuels up
The existing refineries have not enough capacity to meet the domestic fuel requirement. Imports are
still needed to make up for the shortage. In the period of 1993 to 1999, imports of oil fuels have
tended to increase. Imports would grow when the refineries have to stop operation for repairs or
maintenance. Imports of crude oil and oil products were handled by Pertamina's affiliates, but since
July 1998 Pertamina took over the job.
Imports of Arab Light Crude (ALC) is made by Atmaco under contract signed on June 20, 1998 in
Dakhran, Saudi Arabia.
In the past 6 years, imports of oil fuels rose from 47.3 million barrels valued at US$ 1 billion in 1993,
up to 120.8 million barrels valued at US$ 1.7 billion in 1998. Imports peaked in value at US$ 2.3
billion in 1997. In 1999, imports are estimated to rise as a number of refineries have to stop
operation temporarily such as the Cilacap and Exor-I refineries.
Imports of oil fuels have come mainly from Singapore. In 1998, imports from that country totaled 33
million barrels valued at US$ 480.1 million. Imports from Singapore peaked at 67.5 million barrels
valued at US$ 1.6 billion in 1997. Imports from Singapore include fuel oil, Inco duel, HOMC, avtur,
gas oil, HSFO, IDO and DPK. Imports also come from Kuwait. The majority of installed pumps were
not initially designed for their current function. Frequently, a line in a facility is modified and the
pump that started out providing cooling fluid to an injection molding machine is now asked to
transfer oil from a rail car to a tank. All too often, this leads to numerous problems for the pump and
the factory. Pumps operate where the pump curve crosses the system curve. If you move a pump
from one system to another, this means that the system curve is different. This new system may
cause the pump to operate away from its best efficiency point, leading to seal failures and other
component problems that are simply symptoms of a mis-matched pump and system.and Saudi
Arabia. Irrelugar suppliers include the United Arab Emirates, Bahrain, Malaysia, Italy and Rumania.
Gas oil dominates import. In 1993-1998 gas oil imports rose from 27.3 million barrels valued at US$
642.9 million in 1993 to 31 million barrels valued at US$ 484.5 million in 1998. See the following
table.
Table - 3 Imports of oil fuels, 1993 - 1999')
Year Volume Value
('000 Barrel) (US$ million)
1993 47,393.0 1,031.4
1994 38,119.6 739.6
1995 39,591.9 8.6
1996 60,905.8 1,576.9
1997 94,994.1 2,296.8
1998 120,832.9 1,696.7
1999(*) 18,535.6 --
(*) January - April
Source: Directorate General of Oil and Gas/Data Consult3
COPYRIGHT 1999 P.T. Data Consult, Inc.
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Copyright 1999 Gale, Cengage Learning. All rights reserved.