JAKARTA, Feb. 19 (UPI) -- High construction costs may force Indonesia to focus on enhancing existing refinery capacity instead of building new plants.
"We have to be careful on new refinery construction as the current construction market is tight and has caused the cost to be double this year," said Ari Soemarno, president of state-owned oil and gas firm Pertamina.
The company was contemplating a 400,000 barrel per day, $4 billion refinery to be build with Saudi Aramco as well as a 250,000 bpd refinery with Kuwait Petroleum, the global energy information firm Platts reports.
"There is no progress on the discussions, as refinery construction costs increased significantly," Soemarno said. "Several countries and Saudi Arabia are delaying their refinery construction programs."
Instead, Soemarno said, the company will enhance capacity at three refineries -- the 260,000 bpd Balikpapan refinery; the 340,000 bpd Cilacap refinery; and the 125,000 bpd Balongan refinery.
Pertamina's upgrades include 20 percent more refining capacity by 2012 and the ability to handle sour crude feedstocks at all its refineries, which only Cilacap can do now.
The company owns all of Indonesia's seven refineries which have a 1.05 million bpd capacity now.
