Indonesia's Bakrie Energy to Invest $13 Billion Over Six Years in Petrochemical Facility

---

Researched by Industrial Info Resources (Sugar Land, Texas)--PT Bakrie Energy International (Singapore), a newly established division of industrial conglomerate PT Bakrie & Brothers Tbk (JAK:BNBR) (South Jakarta, Indonesia), recently announced plans to invest $13 billion over the next six years to develop a petrochemical plant in the country.

About $300 million would be invested this year in the first phase of the venture. About 70% of the proposed initial investment would come from loans. According to Yuanita Rohali, the chief financial officer for Bakrie Energy, the firm is in talks with at least four financial institutions, including Western European banks. Rohali also said that the firm is in talks with strategic investors to offer them a stake in the project and has received expressions of interest from several investors based in South Korea, Germany and the Middle East. Bakrie & Brothers was recently reported to have engaged Credit Suisse Group AG (NYSE:CS) (Zurich, Switzerland) and Nomura Holdings Incorporated (NYSE:NMR) (Tokyo, Japan) to arrange the sale of $150 million to $200 million worth of equity-linked notes to raise funds for project investments.

Construction of the proposed petrochemical plant is scheduled to begin in early 2011, with production to commence two and a half years thereafter. Products from the facility will include plastics, fuel and fertilizers. Potential annual profit from the project is estimated at $160 million.

Bakrie & Brothers was established in 1942 as a general commodities trading firm. The group currently has business interests spanning the agribusiness, coal, infrastructure, metal, property, oil and gas, and telecommunications sectors. The group owns a 35% stake in coal miner PT Bumi Resources Tbk (JAK:BUMI) (Jakarta, Indonesia).

Bakrie Energy was established in December last year to engage in commodities trading, and investments in manufacturing and other sectors. The unit was established with three subsidiaries: PT Bakrie Petro International and PT Bakrie Agro Commodity International, both of which focus on commodity trading, and PT Bakrie Amonium International, which will be responsible for the petrochemical project. Rohali said that Bakrie Energy is already trading coal, rubber, crude oil, and palm oil, and expects trading activities to contribute revenues of about $500 million this year.

As of 2009, Indonesia had annual production capacities of 655,000 tons of propylene, 620,000 tons of ethylene, 550,000 tons of high-density polyethylene (HDPE) and 200,000 tons of linear low-density polyethylene (LLDPE). Production capacities in the aromatics segment stood at 895,000 tons per year of xylene and 335,000 tons per year of benzene. Annual production capacities of intermediate petrochemical products, based on feedstock of aromatic compounds, stood at 1.46 million tons of terephthalic acid, 500,000 tons of vinyl chloride monomer and 350,000 tons of styrene monomer.

The country's petrochemical industry is expected to require investments of about $22.6 billion in its upstream sector over the next five years to support the downstream sector. This investment is estimated to augment the growth rate of the sector to 10% from the present level of 6% to 7%.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project spending opportunity databases, market forecasts, high resolution maps, and daily industry news.