Daewoo, Austrade to support refinery in East Java

Daewoo, Austrade to support refinery in East Java

JAKARTA (JP): PT Asia Pacific Petroleum, a company controlled
by Bambang Trihatmodjo, Daewoo Corporation of South Korea and
Austrade of Australia have agreed to build a US$1.5 billion oil
refinery in Situbondo, East Java, an executive said yesterday.

Harsudi Supandi, a PT Asia Pacific Petroleum executive, told
The Jakarta Post that Daewoo Corp. will start building the
refinery within the next six months and its construction will be
completed in three years.

"The agreement, which was signed by Johanes Kotjo and Wisnu
Suhardono of PT Asia Pacific Petroleum, Yoong Soo-cheng of Daewoo
and Peter Liem of Austrade, also said that Daewoo and Austrade
will support the financing of the project," Harsudi said.

He said that Austrade, an agency of the Australian Department
of Industry, Science and Technology, also agreed to provide about
$500 million in syndicated loans for the project while the
remaining $700 million will be arranged by Daewoo Corp.

The other $300 million of the investment will be financed by
equity capital.

He added that PT Asia Pacific Petroleum is 100 percent owned
by Indonesians, including Bambang Trihatmodjo, Johanes Kotjo, who
is a former Salim Group executive, and businessmen Wisnu
Suhardono and Bambang Yoga.

But Harsudi declined to mention the composition of the
shareholdings.

Asked about the possibility of Daewoo becoming a shareholder
in the project, he said that the company would be maintained 100
percent Indonesian.

The Investment Coordinating Board approved last year four
export-oriented oil refineries, including two in East Java to be
constructed by PT Buana Ganda Perkasa with an investment of $3
billion and PT Asia Pacific Petroleum with an investment of $1.5
billion.

PT Sabang Refinery will construct a refinery in Sabang, Aceh,
with an investment of $1.58 billion and PT Indo Mudi Oil Corp.
and another one in Pare-Pare, South Sulawesi, at a cost of $1.03
billion.

President Soeharto dedicated on May 25 the country's first
export-oriented oil refinery in Balongan, West Java, which was
set up by the state-owned oil company Pertamina at a total cost
of approximately $2 billion.

Harsudi noted that his company's refinery will have a refining
capacity of 150,000 barrels per day, which will eventually be
doubled.

He said that crude oil for the refinery will be imported from
a Middle Eastern country.

"We are in the final negotiation with the suppliers," he added
without elaborating.

He said that the bulk of the plant's production will be
exported to South Korea and the remainder to other countries.

Although the license from the investment board states that the
refinery is 100 percent export oriented, it is allowed to sell
part of its output on the domestic market to meet increasing
demand.

"If someday Pertamina needs our products, why not," he said.

He said that the plant's production of naphtha might be sold
to PT Chandra Asri as a feedstock for its olefin plant in West
Java.

PT Chandra Asri Petrochemical Center is an olefin producer
controlled also by Bambang Trihatmodjo, timber tycoon Prajogo
Pangestu and Napan Group chairman Henry Pribadi. (04)