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Rosneft, Pertamina to sign framework deal on Indonesian refinery - Kremlin

* Deal expected to be signed in Sochi this week

* Pertamina has been seeking partner for $12 billion project (Adds background)

By Denis Dyomkin

MOSCOW, May 17 (Reuters) - Russia's Rosneft and Indonesia's Pertamina will sign a framework deal this week on an oil refinery in Indonesia, a Kremlin (LSE: 0Q8D.L - news) aide said on Tuesday, in what could be a first Russian foray into a region dominated by OPEC producers from the Gulf.

Russian presidential aide Yuri Ushakov, who announced the news, did not elaborate.

The deal is expected to be signed in the Russian Black Sea resort of Sochi on the sidelines of a conference there.

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Pertamina has been looking for a development partner for the $12 billion Tuban refinery project.

Apart from Rosneft, it has held talks on the project with Saudi Arabian national oil giant Saudi Aramco, China's Sinopec Corp , Kuwait Petroleum International and a consortium involving Thailand's PTT Global Chemical and Thai Oil (Stuttgart: 1958171.SG - news) , Pertamina refineries director Rachmad Hardadi said last month.

Last year, Indonesia rejoined the Organization of the Petroleum Exporting Countries as it sought to boost cooperation with the oil cartel and possibly source more crude from Saudi Arabia.

Russia has for years been muscling in on Asian markets where Saudi Arabia was once the unchallenged dominant supplier. Riyadh is retaliating in Moscow's backyard, Europe, with aggressive price discounting.

Rosneft's head, Igor Sechin, has been a staunch proponent of Russia's independent energy policy. He told Reuters last week that internal differences were killing OPEC and its ability to influence the markets had all but evaporated.

Last month, Rosneft said it had discussed Pertamina's possible participation as a shareholder in its upstream projects in Russia. Both companies have also considered Rosneft's possible participation in downstream projects in Indonesia.

Sechin has said Rosneft is interested in creating a regional energy hub in Indonesia, according to a company statement.

Indonesia's fuel output has been hit by a lack of investment in its refining sector since the last refinery was completed in 1994. Pertamina currently has 1 million barrels per day (bpd) in refining capacity, which it plans to raise to 2.3 million bpd through upgrades and additional plants.

The new Tuban refinery, which will eventually be integrated with the TPPI petrochemical refinery that Pertamina took over in late 2015, will have a crude processing capacity of 300,000 bpd and is targeted for completion in 2021.

Indonesia consumes more oil than it produces despite rejoining OPEC. The country consumes 1.6 million bpd and produces around 0.85 million bpd, according to a BP statistical review. (Reporting by Denis Dyomkin; additional reporting by Dmitry Zhdannikov; Writing by Vladimir Soldatkin; Editing by Alexander Winning and Adrian Croft)