Pertamina asks higher margin for Banten refinery

State-owned oil and gas company PT Pertamina has asked the government to raise profit margin for the oil refinery to be built in Bojanegara, Banten province to 14 percent from 10 percent at present, Kontan reported Monday

Pertamina?s processing director, Rukmi Hadihartini, said in Jakarta last week that the margin needed to be increased to 14 percent to ensure that the multi-billion dollar Bojanegara refinery project be economically viable.

?We are asking for additional incentives such as tax and import duty breaks to enable us to increase the margin to 14 percent,? she said, adding thatsuch incentives were needed for such a high risk project.

In March 2008, Pertamina signed an agreement with National Iranian Oil Refining & Distribution Co. (NIORDC) and Petrofield Refining Company of Malaysia to build the US$6 billion refinery.

Pertamina and NIORDC would each have a 40 percent stake in the refinery, with Petrofield holding the other 20 percent.

During Phase One, the refinery will run at 150,000 barrels of oil per (bpd) day and the operation will be expanded to the full processing capacity of 300,000 bpd.

?Iran is committed to supplying half of the crude oil needs of the refinery, that is 150,000 bpd,? NIORDC President Mohammad Reza Nematzadeh said on July 2008.

In July last year, Pertamina?s VP for Business Development Plan Priyo Utomo said that Pertamina and its partners would construct the refinery in 2009 and it is expected to begin commercial operation in 2013.

According to him, the feasibility study on the project by a French firm is in progress and expected to be completed in four months. (*)