Pertamina seeks new crude source for Banten refinery project

State-owned oil, gas firm Pertamina is seeking crude oil supplies from other oil producing countries to feed its refinery project in Banten, The Jakarta Post reported Wednesday.

 

Pertamina’s processing director Suroso Atmomartoyo said on Monday evening that Pertamina was currently in talks with a number of countries to secure the crude supply. He refused to name the countries, saying the negotiations were still at the early stages.

 

“The commitment with Iran is a fragile one, so we are looking for other sources to supply the crude. We have to ensure we get the supplies before the refinery is completed,” Suroso said.

 

Suroso said that the company was still conducting the feasibility study on the Banten project.

 

In August 2007, Pertamina has decided to put on hold its plan to build a refinery in Banten due to insufficient crude oil and gas supplies.

 

Suroso said that all the negotiations with the company's potential partners in the refinery project had been also halted. Pertamina would need at least a year to decide whether or not it would go ahead with the plan. But he guaranteed that the project would be go on, he said in August 03.

 

Pertamina has signed a memorandum of understanding with a number of companies to jointly build new refineries. The company has, for example, reached an initial agreement with Sinopec of China to build a refinery in Tuban, East Java, and with Kuwait Petroleum to build a new refinery in Sulawesi .

 

Through its subsidiary Elnusa, Pertamina has also reached an agreement with National Iran Oil Company to build a refinery in Banten.

"We have asked the Iranian company to provide crude supply of about 250,000 barrels, but the company can not meet the requirement," Pertamina's CEO Ari Soemarno said on June 2007. Under the initial agreement, the Iranian company would give a discount for the crude oil supply to be used for the Banten refinery which would cost about US$3 billion to build.

 

A number of firms had planned to build refineries in , but none has been realized due to several obstacles, including lack of incentives, swelling costs, low margin and lack of long-term crude supply. (*)