Released on 10/12/12

PTT Global Chemical (PTTGC; Bangkok) on Friday signed a memorandum of understanding with state-owned Pertamina (Jakarta) to invest jointly $5 billion in an integrated refinery and petrochemical complex on the island of Java, Indonesia. “We are confident that a partnership between PTTGC and Pertamina in a petrochemical complex will be mutually beneficial as it reflects the shared strategic intent of both companies,” says Anon Sirisaengtaksin, CEO of PTTGC. PTTGC plans to diversify its portfolio to include downstream specialties and green chemicals, he says. Further details were not disclosed but a formal agreement is due to be signed in April 2013.

“Petrochemicals are one of Pertamina’s core growth pillars to achieve its 2025 vision as a world-class energy and Asian energy champion,” says Karen Agustiawan, Pertamina CEO. Pertamina is serious about this partnership and the Indonesian authorities are showing strong support toward Pertamina, she says. Pertamina plans to integrate five refineries with petrochemicals. PTTGC recently submitted a prefeasibility study to build a joint-venture refinery and aromatics complex in Vietnam. 

Meanwhile, Chandra Asri (Jakarta), Indonesia’s largest petrochemicals producer, has signed a separate agreement with Pertamina to establish a joint-venture polypropylene (PP) manufacturing plant. The facility will cost about $200 million and will be built at Balongan, West Java. It will be designed to produce 250,000 m.t./year of PP. Pertamina is expected to supply refinery propylene to the unit and own a 51% stake in it. Chandra Asri will have the rest. Completion is expected in 2015. Pertamina signed a contract earlier this year with Foster Wheeler to build a residue fluid catalytic cracker and a propylene recovery unit at its Java refinery. Chandra Asri also this year started construction of a 100,000-m.t./year butadiene extraction plant at its Cilegon, West Java complex, where it operates a Lummus-process steam cracker designed to produce 600,000 m.t./year of ethylene; 320,000 m.t./year of propylene; and 220,000 m.t./year of C4 fraction. The butadiene plant will be operated by the company's PT Petrokimia Butadiene Indonesia subsidiary.

Chandra Asri's downstream units are designed to produce a combined 320,000 m.t/year of polyethylene (PE) and 360,000 m.t./year of PP. All of the polyolefin units, with the exception of one, are based on Unipol technology. Showa Denko provided its bimodal PE technology to the other facility. Chandra Asri plans to expand the cracker to 1 million m.t./year of ethylene and raise capacity of the PE complex to 540,000 m.t./year. PP capacity at Cilegon is expected to be hiked to 480,000 m.t/year. Separately, the company's Styrindo Mono Indonesia subsidiary operates a 340,000-m.t./year styrene plant, which is located at Puloampel, not far from Cilegon.

The new and existing PP capacity is expected to help Chandra Asri meet Indonesia’s growing demand. The country’s plastics consumption reached 2.8 million m.t. last year. PP and PE accounted for 70% of the total, and polyvinyl chloride and polyethylene terephthalate accounted for 30%. Chandra Asri is owned 59.35% by PT Barito Pacific (Jakarta), controlled by businessman Prajogo Pangestu; 30.03% by SCG Chemicals (Bangkok); and 5.52% by Marigold Resources. The remaining stake is owned by the public.

Source Chemical Week