Pertamina to review the building of Tuban refinery

State-owned oil and gas firm PT Pertamina will reevaluate the construction of oil refinery in Tuban, East Java because investment costs are on the constant rise, the Koran Tempo reported Tuesday.

Pertamina president director Ari Soemarno said that costs of construction doubled in the last two years. ? We along with Sinopec are currently reevaluating the refinery?s construction,? Ari said in Jakarta on Monday.

According to Ari, if the ventures build the refinery this year with a small margin there will be a potential loss. The construction work should be started as soon as 2007.

Pertamina signed last year a memorandum of understanding (MoU) with Chinese oil company Sinopec to build an oil refinery in Tuban. The two companies will arrange the funds for the project.

Ari said hopefully next year the construction costs will fall with the completion of several refineries across the globe. The high oil prices have lead several countries to build refineries. This automatically increased the construction costs.

The planned Tuban would have a capacity to process crude oil of between 150,000 and 200,000 barrels per day and will need an investment of US$1.5 - 3 billion. It will get crude supplies from the Middle East. (*)