UAE and Indonesia sign energy agreements

  • Jan 14, 2020
  • Energy Global

Abu Dhabi National Oil Co. (ADNOC), Pertamina and Chandra Asri have reached an agreement to explore potential future developments.

Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, and Joko Widodo, President of the Republic of Indonesia, recently witnessed the exchange of signed agreements between ADNOC and Indonesia’s Pertamina and Chandra Asri. Pertamina and ADNOC signed a memorandum of understanding (MoU) to explore the potential development of a crude to petrochemicals complex in Balongan, Indonesia. They have also signed a sales agreement in which ADNOC will supply Pertamina with up to 528 000 t of LPG by the end of 2020. Chandra Asri and ADNOC also signed an MoU to explore potential supply of naphtha to Chandra Asri that would be utilised as a feedstock for their current and potential new cracker complex in Indonesia.

Dr Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, signed each of the agreements. Nicke Widyawati, Pertamina President Director and CEO, and Erwin Ciputra, Chandra Asri President Director, signed on behalf of their respective companies.

Dr Al Jaber said: “The agreements signed with Pertamina and Chandra Asri will potentially help ADNOC to secure additional in-market presence in one of Southeast Asia’s fastest-growing economies, enabling new domestic value-creation opportunities across the hydrocarbon chain. Today’s announcement is a testament to the success of ADNOC’s international partnership strategy, our ability to consistently deliver innovative value-creation opportunities and the UAE’s strong ties with the Republic of Indonesia.”

Widyawati commented: “The agreements with ADNOC will strengthen Pertamina’s ability to carry out its national duty, realising Indonesia’s energy security in a challenging and complex environment. We expect that both the potential refinery development at Balongan and the direct LPG supply will allow us to optimise Indonesia’s oil and gas value chain, better serve the domestic market through our vast distribution networks across the whole archipelago and access new opportunities to meet growing global demand for petrochemical products.”

Ciputra added: “Chandra Asri is delighted to explore opportunities with ADNOC in the area of feedstock supply for our current and future petrochemical business. This is in line with our heritage and strategy of developing long-term, win-win partnerships as a growth partner; supporting our ongoing mission to contribute to Indonesia’s economic development.”

The potential crude to petrochemicals complex would build upon the ambitions outlined in the comprehensive framework agreement signed by ADNOC and Pertamina in 2019, while accelerating Indonesia’s path towards petrochemical self-sufficiency.

The new Pertamina LPG sales agreement with ADNOC will allow for both FOB sales, in which customers collect product from Abu Dhabi, and CFR sales, in which ADNOC delivers product to customers. This flexibility further supports ADNOC's strategy to deliver more CFR cargos to its customers and build upon its trading and logistics capabilities.

ADNOC’s potential supply agreement with Chandra Asri will further expand the company’s reach in Indonesia and is expected to help lay the groundwork for other potential areas of collaboration between the two companies.