East Kalimantan Methanol to operate later this year<\/p>\n
By Johannes Simbolon<\/p>\n
BONTANG, East Kalimantan (JP): The operation of Kaltim
\nMethanol Industry's methanol manufacturing plant in Bontang, East
\nKalimantan later this year will cause an oversupply of methanol
\non the local market.<\/p>\n
But company president Abdul Wahab said yesterday the
\noversupply would not last long as the new plant could stimulate
\nthe development of other methanol-based industries in Indonesia
\nlike the acetic acid industry.<\/p>\n
"Therefore, we are not worried about the oversupply because we
\nbelieve demand will soon pick up with the development of other
\nmethanol-based industries," Wahab told The Jakarta Post at a
\nceremony marking the completion of the company's methanol plant.<\/p>\n
He said investment in acetic acid in Indonesia had great
\nprospects because Indonesia so far imported most of the raw
\nmaterials for garment, food and rubber industry.<\/p>\n
Wahab said KMI would produce 660,000 tons of methanol a year
\nstarting December this year, 60 percent for export and the
\nremaining 40 percent or about 260,000 tons for the local market.<\/p>\n
KMI is 70 percent owned by the Humpuss Group controlled by
\nPresident Soeharto's son Hutomo Mandala Putra and 30 percent by
\nJapan's trading house Nissho Iwai Corporation.<\/p>\n
He said the methanol plant on Bunyu island, which is currently
\noperated by the Medco group in joint cooperation with the state-
\nowned oil and gas company Pertamina -- the owner of the plant --
\nhas a production capacity of 300,000 tons of methanol a year,
\nwhich is sold on the local market.<\/p>\n
The methanol plant in Bunyu was built in 1985, but faced
\nproduction problems for 10 years because of natural gas supply
\nshortages.<\/p>\n
Medco has established infrastructure to supply gas from the
\nnearby Tarakan.<\/p>\n
Wahab was confident KMI could control the largest portion of
\nthe local market because it had long formed business partnerships
\nwith local buyers through its sister company Humpuss Trading.<\/p>\n
Humpuss Trading was the sole distributor of methanol produced
\non Bunyu Island before Medco stopped its monopoly early this
\nyear.<\/p>\n
"Although our competitor offers lower prices, we believe our
\nformer buyers will not leave us because we now have our own new
\nmanufacturing plant which guarantees the continuity of supply
\nfrom us," he said, adding buyers' continuity of supply was more
\nimportant than price.<\/p>\n
KMI would also have no difficulty finding an overseas market
\nin case the 250,000 tons of methanol it had allocated for the
\nlocal market could not be absorbed.<\/p>\n
According to the joint venture agreement between Humpuss and
\nNissho Iwai, the Japanese company will handle the sale of KMI's
\nmethanol outside Indonesia.<\/p>\n
"The market in Asia is very big. So far, we believe we can
\ncompete with the North American and Arabian suppliers on the
\nregional market because we pay a lower freight cost," said Wahab.<\/p>\n
He said there were only three methanol plants in Asia -- KMI's
\nplant in Bontang, Pertamina's plant in Bunyu and the plant in
\nSabah owned by Malaysia's Petronas -- which had the combined
\nproduction of 1.62 million tons a year, compared with Asia's
\ndemand which reached three million tons a year.<\/p>\n
Industrial analysts speculated that the estimated oversupply
\nof methanol might prompt Humpuss to develop an acetic acid plant
\nin the near future.<\/p>\n
Wahab neither confirmed nor denied such a speculation.<\/p>\n
In yesterday's ceremony, Wahab presented the contractor of
\nKMI's methanol plant, Lurgi, with the certificate stating KMI
\naccepted the mechanical completion of the plant.<\/p>\n
Lurgi, based in Frankfurt, Germany, is one of the world's
\nbiggest hydrocarbon engineering companies.<\/p>\n
Wahab said the plant would conduct trial operations for three
\nmonths before commercial production starts in December.<\/p>\n
"The plant has finished ahead of schedule and the cost of
\nconstruction might be less than the US$350 million budget we
\nallocated," he said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/east-kalimantan-methanol-to-operate-later-this-year-1447893297",
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"sponsor": "Okusi Associates",
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