Malaysia's Petronas is finalizing its $15 billion Refinery and Petrochemical Integrated Development (RAPID) project in Johor, set to process 300,000 barrels per day of crude oil. The facility, part of a larger $24.6 billion Pengerang Integrated Complex, will supply fuel to Indonesia, highlighting the contrasting trajectories of Petronas and its Indonesian counterpart Pertamina.
Petronas operates as a commercially driven entity, while Pertamina remains heavily influenced by government policy and subsidy programs. This divergence is evident in their investment strategies: Petronas allocated 55 billion ringgit ($13.5 billion) for 2018 projects, compared to Pertamina's reduced $4.2-4.5 billion target. Wood Mackenzie research director Andrew Harwood noted Petronas' commercial focus contrasts with Pertamina's role as a national oil company.
The RAPID project, nearing completion in 2019, is part of an even bigger Pengerang Integrated Complex (PIC) developed by over 50,000 workers at an estimated cost of 100 billion ringgit ($24.61 billion). It includes a deep-water oil and liquefied natural gas (LNG) import terminal. Petronas declined to comment on details but stated RAPID would position Malaysia to capitalize on regional energy demand.
Indonesia's Pertamina faces significant challenges, including delays in refinery projects. A 2014 Refinery Development Master Plan aimed to double output to 2 million barrels per day by 2024, but projects like the Cilacap refinery upgrade have been pushed back from 2021 to 2023. Deputy Minister Fajar Harry Sampurno cited land acquisition issues as a key obstacle.
Pertamina's capital spending has dropped to $4.2-4.5 billion in 2018, down from $5.5 billion, while Petronas increased its investment by 10 billion ringgit ($2.46 billion) to 55 billion ringgit. Wood Mackenzie estimates Pertamina needs $6 billion in 2022 and an additional $23 billion by 2025 to maintain output and service debt.
Indonesia's fuel subsidies have strained Pertamina, costing $1.5 billion-$2 billion in lost profit in 2018. In contrast, Malaysia's government bears fuel subsidy costs. Pertamina's 2018 profits were the lowest in over a decade at 5 trillion rupiah ($352.73 million), while Petronas reported 26.6 billion ringgit ($6.54 billion) in profits during the same period.
