Bintuni Petrochemical Project Expected to Start Next Year

Bintuni Petrochemical Project Expected to Start Next Year

The government expects a project to develop a US$4 billion fertilizer and petrochemical industrial center in Bintuni Bay, West Papua, to kick off next year to help reduce reliance on imports.

The Industry Ministry's director general for manufacturing-based industry, Panggah Susanto, said on Tuesday in Jakarta that the integrated upstream industrial complex would produce urea and ammonia-based fertilizers and a wide array of petrochemical products, including methanol, polypropylene and polyethylene.

'We still have to ensure an availability of gas. Once we secure a gas allocation, we may commence the project early next year,” he said, adding that the ministry had conveyed the amount of gas required to upstream oil and gas watchdog SKKMigas, which had vowed to provide gas from surrounding fields.

Bintuni Bay is located near the Tangguh liquefied natural gas (LNG) field in West Papua, which is one of the biggest contributors of Indonesia's overseas gas contracts.

The planned industrial center in Bintuni Bay is estimated to absorb an overall 360 million metric standard cubic feet per day (mmcsfd), with 180 mmcsfd going to each industry.

Panggah said if the project ran according to schedule, commercial production would begin in 2016. A number of investors, both domestic and foreign, have expressed interest in taking part in the project, such as state-owned fertilizer producer PT Pupuk Indonesia Holding Company (PIHC), publicly listed petrochemical producer PT Chandra Asri Petrochemical and several foreign investors, including from Japan and South Korea, he further said.

Chandra Asri will reportedly team up with German-based industrial service provider Ferrostaal GmbH for the construction of a methanol-based olefin production complex in the location with an overall investment of $1.89 billion. The facilities are slated to produce up to 400,000 tons of polypropylene and 175,000 tons of ethylene per year.

The project will be just one of the petrochemical centers designed by the government as part of its effort to shift Indonesia's status from net importer to net producer and exporter of petrochemical products by 2016. Another industrial center has been designated in Muara Enim, South Sumatra, where it aims to build an integrated petrochemical complex to manufacture a variety of products utilizing natural gas.

Indonesia should attract at least $18 billion in investment to develop an integrated petrochemical industry, according to the Industry Ministry. That will translate into a number of refineries, olefin plants, aromatic plants and condensate plants, which will reduce the domestic industry's heavy reliance on imports.

This year, the country may import $8 billion worth of petrochemicals, partly for further processing domestically, with an annual growth rate in consumption of approximately 10 percent. To help attract sizeable investment, the government has offered tax incentives over the past two years by way of tax holidays and tax allowances.

Panggah said the initial development of a fertilizer and petrochemical center in Bintuni Bay would also be followed by the setting up of an integrated oleochemical production center in the vicinity. To pave the way for this project, the government will conduct a feasibility study to calculate the required investment and location, he added

ENDS

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