INDONESIA: RI gears up for petrochemical expansion

“Several investors have announced plans to increase production capacity or build new factories this year so, with the new as well as the expanded factories, we hope to no longer need imported petrochemical products by 2020,” INAplas vice president Suhat Miyarso said after a seminar in Jakarta on Wednesday (12 Mar. 2014).

Suhat said 12 construction projects will be carried out this year, of which five are the expansion of existing plants, while seven are the construction of new plants. The five expansions are to increase companies’ production capacity of certain petrochemical products.

Japan-based Nippon Shokubai, for example, will increase capacity of its acrylic acid plant in Banten, West Java, while Polychem Indonesia will increase its mono ethylene glycol production in Banten and PT Petrokimia Butadiene Indonesia (PBI) will increase the capacity of its butadiene plant. Meanwhile, PT Chandra Asri Petrochemical (CAP) will increase its naphtha cracker production capacity in Banten and PT Asahimas Chemical will increase capacity of its polyvinyl chloride plant, also in Banten.

“The five expansions are expected to be completed in 2015 and will be able to start operating in the same year,” said Suhat, who is also Chandra Asri’s vice president for corporate relations.

New plants will be built by South Korean Honam Petrochemical Corp., which is planning a naphtha cracker facility in Banten, PT Synthetic Rubber Indonesia, which will build a styrene butadiene rubber (SBR) and polybutylene terephthalate (PBT) plant in Banten and PT Unilever Oleochemicals Indonesia, which is planning an oleo chemical plant. German petrochemical company Ferrostaal Industrial Projects will also work together with Chandra Asri to build a methanol-to-olefin (MTO) plant in Papua.

State-owned oil and gas company PT Pertamina will build three refineries, one of which is a joint venture with PTT Global Chemical Public Company Limited (PTTGC).

Suhat said that the completion dates for the new plants vary, though most are expected to be finished between 2017 and 2020.

“In total, the investment for the 12 construction projects is worth USD 39 billion,” Suhat said, adding that each of the three refineries being built by Pertamina would cost USD 10 billion. According to INAplas chairman Amir Sambodo, investment in the country’s petrochemical industry in 2013 was around USD 7 billion to USD 10 billion.

With the national demand for petrochemical products at 4.3 million tons per year and the country’s production capacity only 3.9 million tons, Indonesia still imports petrochemical products from countries such as Malaysia, Singapore, Thailand, China and several Middle Eastern countries. According to INAplas, the value of petrochemical imports to Indonesia reaches up to USD 8 billion per year.

The Industry Ministry’s director for basic chemicals, Muhammad Khayam said that there were many obstacles for the country to develop and excel in the petrochemical industry.

“There is still a tendency to export oil and gas, which is needed for industrial raw materials, such as naphtha, condensate and gas. Infrastructure such as seaports, access roads, power plants and pipelines is also lacking,” he said.

Khayam added that petrochemical product imports from Malaysia, Singapore, China and Middle Eastern countries are also an obstacle to overcome.

Source: Daily "The Jakarta Post", Jakarta; 13 Mar 2014
(Syed Rahid Ali, Karachi, Pakistan)