Pertamina To Persuade Kuwait Petroleum To Build Balongan Refinery

Wednesday, Mar 07, 2012

JAKARTA (Dow Jones)--Indonesia's state-owned energy firm will persuade Kuwait Petroleum Corp. to continue to jointly build a planned 300,000 barrel-a-day oil refinery in Balongan, West Java, after the government turned down KPC's request for further incentives, a government official said Wednesday.

"Pertamina is negotiating [the matter] with Kuwait Petroleum," said Evita Legowo, oil and gas director general at the Ministry of Energy and Mineral Resources.

Legowo said the finance ministry turned down KPC's request to waive import taxes for imported equipment for the refinery. The government agreed to waive income tax for a certain period.

In August 2011, KPC and Pertamina signed an agreement to conduct a feasibility study to build refinery in Balongan. The refinery, which will need around $9 billion in total investment, was expected to start operations by 2017 and is expected to help reduce the country's imports of refined petroleum products.

-By Deden Sudrajat, contributing to Dow Jones Newswires; +62 21-39831277; i-made.sentana@dowjones.com

(END) Dow Jones Newswires

07-03-12 1002GMT