Indonesia's Pertamina to be Part of $15 Billion Refinery Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Indonesia's state-owned oil and gas exploration and production company PT Pertamina (Jakarta) is planning a collaboration with several domestic and international petrochemical companies for a $15 billion refinery project.

According to Alexander Barus, director for upstream chemical industries at the Indonesian Industry Ministry, the move to collaborate on such a massive project is a step toward slashing the country's dependence on foreign refineries for naphtha production. Naphtha is an essential requirement for producing high-octane gasoline.

The plan foresees the construction of three refineries spanning the next 10 years. Each plant will cost an estimated $5 billion, while the total capacity of the three plants is expected to be 900,000 barrels per day of naphtha.

Alexander also let on that the first phase of the project would involve the erection of a refinery in the city of Cileogon, situated in the Banten province on the Indonesian island of Java. Work on the project is expected to commence this year.

The establishment of the first refinery will be followed by the other two. One will be set up at Bontang, in the East Kalimantan province, and by 2020, the other will be established at Tuban in East Java--each with an installed production capacity of 300,000 barrels per day.

For the Cilegon refinery, Pertaminas has honed in on several partners, including petrochemical producer PT Chandra Asri (CA) (Jakarta), Malaysian-owned plastics manufacturer PT Titan Kimia Nusantara Tbk (JAK:FPNI) (Jakarta), petrochemical exporter and supplier PT Trans Pacific Petrochemical Indotama (Medan, Indonesia), polypropylene manufacturer PT Tri Polyta Indonesia Tbk (JAK:TPIA) (Jakarta) and polypropylene manufacturer and seller PT Polytama Propindo (Jakarta).

"Right now, Chandra Asri is the [partner] that is most ready," Alexander told the media.

CA, which is reportedly the largest ethylene producer in Indonesia, is also planning a long-term investment of an estimated $2.3 billion for the expansion of its current oil refinery. This investment will also include $1 billion on a naphtha cracking unit, the rated capacity of which has not been announced. The company's current capacity is known to stand at nearly 525,000 tonnes per year of ethylene, 240,000 tonnes per year of polypropylene and 250,000 tonnes per year of polyethylene.

Meanwhile, Amir Sambodo, chairman of the Indonesian Olefin and Plastic Industries Association told reporters that Polytama also planned an estimated $20 million expansion of its production capacity from the current 280,000 tonnes per year to 440,000 tonnes per year over the next few years by integrating its existing production facilities.

According to sources, a dearth of naphtha supply in the market has made it increasingly difficult for petrochemical companies to cater to the galloping demand, particularly for polyethylene and polypropylene in the domestic market. The Olefin and Plastic Industries Association says that domestic companies supply 400,000 tonnes per year of polypropylene, which still falls short of the 700,000 to 800,000 tonnes per year of domestic demand.

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