Pertamina may drop Bojanegara refinery project

State oil, gas firm PT Pertamina (Persero) is reviewing plans to construct a fuel refinery in Bojanegara, Banten, saying the US$5 billion project may not be economically feasible.

?A study suggests the project is not economically viable. But, we are not saying we will drop the project as we still need to discuss this with our partners,? Pertamina spokesman Mochammad Harun said Wednesday

In July 2009, Pertamina and its partners have signed a agreement to establish a joint venture (JV) to develop the refinery.

In the JV company, Pertamina has 40 percent stake while National Iranian Oil Products Refining &Distribution Company (NIORDC) and Malaysia?s Petrofield Refining Company will have 40 percent and 20 percent shares, respectively.

The JV will develop a refinery in two stages with combined capacity of 300,000 barrels per day with completion seen in 2015-2016.

Harun said Pertamina would re-evaluate the most economically feasible option, choosing between constructing the new refinery or expanding the capacity of its existing refineries.

Pertamina refineries director Edi Setianto said the project would not he feasible economically of it was only a refinery.

Oil and gas director general Evita Herawati Legowo said the government had only provided an income tax incentive to the refinery project. ?Other incentives are still being proposed,? she said.

Pertamina has repeatedly asked for more incentives from the government, saying it had found difficulties attracting investors since refinery projects only have a small profit margin. (*)