Delays cloud plans for Indonesian refinery

Eric Watkins
Senior Correspondent

LOS ANGELES, Feb. 15 -- Indonesia's state-owned PT Pertamina has announced a delay of as long as 2-3 years in construction of a 150,000-200,000 b/d refinery in Tuban, East Java.

Pertamina Director Suroso Atmomartoyo said the firm has found no partner for the project, on which construction was to have begun this year with completion expected in 2008.

President Susilo Bambang Yudhoyono disclosed plans for the refinery last July.

Indonesia imports almost a third of the oil products it uses because its 1.06 million b/d of refining capacity isn't enough to meet demand.

Last August, China's Sinopec and Pertamina announced plans to study feasibility of the Tuban refinery.

At the time, Pertamina Pres. Widya Purnama said the study was expected to be completed by the end of 2005, enabling construction of the refinery to begin in 2006.

But Atmomartoyo said Pertamina may have to cancel plans to cooperate with Sinopec due to prolonged and complicated negotiations over costs, which have risen because of brisk worldwide refinery construction.

Indonesia's Koran Tempo newspaper quoted Atmomartoyo as saying that the cost of the project is now estimated to reach $3 billion from an initial projection of $1.6 billion.

Factors other than rising construction costs may be at play in Sinopec's uncertainty over the refinery project.

Much of the feedstock for Tuban is to come from the Cepu Block, where the start of production is expected to be delayed by a dispute over operatorship between ExxonMobil Corp. and Pertamina (OGJ Online, Feb. 13, 2006).

Contact Eric Watkins at hippalus@yahoo.com.

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