PT Pertamina (Persero), SK Lubricants Co., and PT Patra SK have agreed to cooperate in order to increase production and marketing capability of the Cilacap lube base oil refinery in Indonesia. The three companies signed a Memorandum of Understanding (MoU) in Jakarta on Tuesday July 2, 2013 to conduct a feasibility study in order to boost production at the Cilacap refinery in Central Java. The MoU was signed by Pertamina Managing Director, Chrisna Damayanto, SK Lubricants CEO & President Choi Kwan Ho and Patra SK President Director, Dadik Pribadi.

The feasibility study will include technical, market, and economic aspects of the project which will be the basis for the three companies to work together to increase the production capacity of the lube base oil refinery LOC (Lube Oil Complex) Refinery Unit IV Cilacap. Through this partnership, LOC RU IV Cilacap refinery will be designed to be able to produce Group II lube base oil. The Calicap refinery presently has the capacity to produce 8,600 bpd Group I lube base oil.

After signing the MoU, the three companies will form a joint team that will finalize the strategy of the agreement in order to form a joint venture company. Feasibility study will be held in 6-8 months.

"The increase in lube base oil production capacity of RU IV Cilacap Refinery LOC is intended to capture the best possible opportunities in the trend of increasing demand for environmentally friendly lube base in the domestic market, regional and global markets" said Ali Mundakir, Pertamina’s Corporate Communication Vice President.

PT Patra SK, a joint venture between PT Pertamina Patra Niaga and SK Energy, operates a lube base oil plant, referred to as the SK-Pertamina LBOP, in Dumai, Sumatra, Indonesia with a capacity to produce 10,000 bpd of Group III lube base oil.