UPDATE 1-S-Oil defers new S.Korea refinery decision for 2 yrs

(Updates with details)

SEOUL, Sept 17 (Reuters) - South Korean refiner S-Oil Corp (010950.KS: Quote, Profile, Research) will wait at least a couple of years to reconsider a plan to build a 480,000 barrels per day new refinery because of surging construction costs, its chief said on Monday.

"In this construction cycle we will not be able to make money," said CEO Samir Tubayyeb in a university lecture. "Construction costs are going up more than three times."

S-Oil in June put an indefinite hold on its plans to build a $4 billion new refinery, the latest energy project to fall victim to tight contractor markets and soaring costs.

The firm had previously said the project was delayed, not cancelled, though analysts have said S-Oil might have to wait years before seeing any relief in costs.

S-Oil's plan had included building two crude distillation units, a hydrocracker and a residual fluid catalytic cracking unit, which would have nearly doubled its capacity to make it South Korea's second-largest refiner after SK Corp. (003600.KS: Quote, Profile, Research)

S-Oil is 35-percent owned by Saudi Arabia's state oil firm Saudi Aramco, which has been looking to invest in refineries in Asia to guarantee buyers for its crude and to tap the region's growing fuel demand.

Tubayyeb said South Korea, an exporter of oil products with excess refining capacity, did not need extra crude supplies from producers group OPEC, which agreed last week to boost output from November to ease consumer worries over tight winter supplies.