Petronas, a major investor in Sudan where it has equity in the Nile Blend and Dar Blend oilfield developments, has been in discussions with Sudan to build a refinery there for three years.

“The cost environment has gone up so much. At this moment in time, we cannot justify the viability of the program due to higher investment costs,” Petronas CEO Hassan Marican told reporters at a news conference.

Marican declined to set a date for when construction on the refinery might begin.

Equipment and labor shortages have pushed costs up globally in the energy sector, leading to several refining projects being delayed or cancelled.

An official from Sudanese state oil firm Sudapet said last month costs were now estimated at $5 billion, up from original estimates of between $1 billion and $2 billion.

Petronas signed a deal in August 2005 to invest in the refinery, which would process some of the the hard-to-sell, high acidic Dar Blend crude. (Reuters)