$3 billion Brunei Oil Refinery

[Reuters reported on Thursday, 25th Sept 2008 that Brunei is building a refinery expecting to cost around $3 billion]

BANDAR SERI BEGAWAN, Sept 25 (Reuters) - The expected cost of a proposed refinery project in Brunei could rise from an initial estimate of $3 billion due to rising steel prices, the chief of PetroBru said.

Mohd Zaman Noordin, chief executive of the small, privately held firm which won approval last November from Brunei to do a feasibility study on the project, said PetroBru was in talks with potential customers from Kuwait and China to take products from the refinery.

"Other than these two, we are also in talks with a few other parties. None of these have been concretely finalised yet, because I think to an extent some of them are waiting for the results from the detailed feasibility study," he told a news conference.

Steel prices peaked in July at above $1,000 a tonne for Chinese hot rolled coil, but has since retreated to around $825, tracking losses in other base metals prices.

If it is built, the plant on Pulau Muara Besar -- earmarked as Brunei's new deepwater hub for regional markets -- will have a preliminary capacity of 200,000 barrels per day (bpd) and a maximum capacity of 500,000 bpd.

PetroBru has appointed consultancy Wood Mackenzie to lead a detailed economic feasibility study for the project and construction would begin in 2012 or 2013, depending on its outcome.

The project would be the first world-class refining complex in the oil-rich sultanate, which now has a 10,000-bpd plant run by Brunei Shell Petroleum (RDSa.L: Quote, Profile, Research, Stock Buzz).

PetroBru, 26 percent-owned by Malaysia's TRC Synergy (TRCG.KL: Quote, Profile, Research, Stock Buzz), has completed an economic viability study for the refinery which will produce jet fuel and diesel. (Reporting by David Chance; Editing by Ramthan Hussain)