BANDAR SERI BEGAWAN - CONSTRUCTION of Brunei's second oil refinery could begin by late 2012, the developer of the proposed facility was quoted as saying on Thursday.

The start date will depend on findings from a feasibility study, The Brunei Times quoted Mohammed Zaman Noordin, chief executive of PetroBru, as saying.

PetroBru is 26-per cent held by Malaysian-listed TRC Synergy Berhad.

The detailed feasibility study began this month and will take about six months to complete, the report said.

Construction costs of the refinery were initially estimated at US$3 billion (S$4.3 billion) but might be higher because of the rising price of steel products, Mr Noordin was quoted as saying.

PetroBru is looking at partners from outside Brunei, including one from Kuwait which would supply some of the crude oil, and some Chinese companies that could take the refined products, Mr Noordin said.

'The initial pre-feasibility study has already shown that there's definitely a possibility for an export-oriented refinery. The study will further validate that, and hopefully it will convince the investors to come aboard,' he said.

The refinery would have a preliminary capacity reportedly estimated at 200,000 barrels a day.

Malaysia's Kenanga Research said earlier this year that the refinery project, proposed for Pulau Muara Besar area, would spur development of a port which had been mooted there.

'Therefore, as a country Brunei needs the oil refinery to grow its economy to the next level,' Kenanga said.

Brunei Shell Petroleum - a joint venture between the Brunei government and the Royal Dutch Shell Group - already operates a refinery in the sultanate.

Brunei is South-east Asia's fourth-largest oil producer and the world's ninth-largest exporter of liquefied natural gas, the World Trade Organisation said in a report on the country this year.

Observers have said the resources have been dwindling, leading to a debate within the administration about how to secure the country's economic future. -- AFP