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March 7, 2008

Pertamina, Iran firm in $2bn deal to build refinery

Indonesia's state oil and gas company PT Pertamina will sign an agreement with an Iranian firm to build oil refinery in Banten province with a capacity of 200,000 barrels of oil per day, the Jakarta Post reported Thursday.

If the joint venture deal is signed, the $2 billion facility will be the second-largest oil refinery in the country, the newspaper said. Pertamina president director Ari Soemarno has said a team from the company's processing and refinery division was on its way to Tehran to meet with representatives of Iran's state oil company, National Iran Oil Company.

The team will discuss a number of issues before the signing, including the security of the crude oil supply. The two companies had long planned the project but negotiations stalled over a disagreement on the refinery's oil supply.

Having initially promised to be able to supply up to 300,000 barrels of oil, Iran said later it would only be able to supply 150,000 barrels, putting the project in jeopardy.

However, Pertamina recently struck a deal with Libya for another supply of 50,000 barrels of oil, helping it revive negotiations. "We think a refinery with a 150,000-barrel capacity is not economically feasible. But it definitely is with 200,000 barrels now that Libya can help," Ari was quoted as telling the daily.

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