Pertamina seeks oil supplies for planned refinery

Indonesia's Pertamina is seeking supplies from oil-producing countries to feed its refinery project in Bojonegara, Banten, after Iran reduced its supply commitment to 100,000 b/d from 300,000 b/d.

Eric Watkins
Senior Correspondent

LOS ANGELES, Oct. 10 -- Indonesia's state-owned PT Pertamina is seeking crude supplies from oil-producing countries to feed its refinery project in Bojonegara, Banten, after Iran reduced its supply commitment to 100,000 b/d from 300,000 b/d.

"The commitment with Iran is a fragile one, so we are looking for other sources to supply the crude," said Pertamina's director of refining Suroso Atmomartoyo. "We have to ensure we get the supplies before the refinery is completed."

Atmomartoyo said Pertamina is in talks with several countries for the crude supply, but he would not identify them, saying negotiations were still at the early stages.

Pertamina and Iran had signed a memorandum of understanding in March 2005 to jointly build the 300,000 b/d Banten refinery with the understanding that Iran would invest in the $5.6 billion refinery and supply the heavy crude.

In July, they agreed to build the refinery and said construction would start in 2008, with completion scheduled for 2012. Officials from the two countries planned an August meeting in Tehran to discuss project details, including equity distribution, project structure, and crude supply agreements.

However, in September Iran expressed disappointment with Indonesia's handling of the plan to build the refinery jointly, including the substitution of Pertamina for its 51.38%-owned subsidiary PT Elnusa to be partner with Iran's National Iranian Oil Refining & Distribution Co. in the project.

"The heads of state of the two countries made a commitment to support the development of the project, but after 3 years there is no progress toward its implementation," said Mahmoud R. Radboy, head of the economic section at the Iranian embassy in Jakarta.

At the same time, Pertamina Pres. Ari Hernanto Soemarno said implementation of the project would be postponed because of rising costs.

Contact Eric Watkins at hippalus@yahoo.com.

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