JAKARTA -- Indonesia's state-owned oil company Pertamina and Saudi Aramco on Thursday finalized an agreement on a $5 billion expansion of Indonesia's largest oil refinery in Central Java.
The two companies will establish a joint venture for the project, in which Pertamina will own a 55% stake. The upgrade will increase the refinery's capacity from 348,000 barrels per day to 400,000 barrels per day. Saudi Aramco will supply most of the crude oil for the refinery. The project is scheduled to be completed in 2021.
The expansion will "help Pertamina to enhance its downstream competitiveness," said Dwi Soetjipto, the company's president. It will also increase the refinery's capacity in derivatives such as petrochemicals.
The move follows a preliminary agreement reached last year. Indonesia, a net oil importer, is expanding its refineries to meet growing domestic demand. Saudi Arabia, meanwhile, has been seeking stable revenue amid low crude prices and competition from other oil producing countries.
Nikkei staff writer Bobby Nugroho contributed to this story.