Chandra Asri, BP to build US$75m plant

JAKARTA (JP): British Petroleum (BP) and Chandra Asri, Indonesia's first olefin producer, have agreed to jointly build Southeast Asia's first polybutenes plant in Cilegon, West Java.

Both companies signed the memorandum of understanding yesterday, agreeing to set up a 50:50 joint venture and invest about US$75 million to build the proposed plant.

Chandra Asri's Chief Executive Officer Peter F. Gontha said the joint venture would strengthen the country's petrochemical industry, as the two competing companies had formed a synergy.

"This is a major step in the country's downstream petrochemical industry, which before faced difficulties because of high investment," he said after the signing.

Gontha said construction would start early next year and would be completed by late 1999.

The plant would initially produce 45,000 tons of polybutenes a year and would eventually produce 100,000 tons, he said.

BP would license its world-leading polybutene technology to the project and Chandra Asri would provide Isobutylene, the plant's feedstock, by pipeline, he said.

As production rises to meet demand growth, additional feedstock would come from the proposed Salim-BP joint venture's naphtha cracker, which is due on stream in the nearby Serang by 2001, he said.

He said the joint venture strengthened the relationship with BP. Chandra Asri, which is also based in Cilegon, recently signed a five-year ethylene supply agreement with PT PENI, in which BP had a majority stake.

Meanwhile, BP Indonesia's chemicals developments director Jim Hay said BP aimed to be Asia's market leader in polybutenes.

"Our investment in this joint venture reinforces BP's commitment to the fast growing local and regional markets. And Indonesia would be our first large-scale producer in the region," he said.

Hay said BP planned to have more projects with Chandra Asri, including an ethyl acetate facility.

Polybutenes are widely used to make lubricating oil, as fuel additives for two-stroke oils, for adhesives and sealants and in the wire and cable industry.

The chemical is used as an additive for cleaner and less polluting gasoline fuel and lubricants.

The joint venture believes rapid growth in regional demand in polybutenes will result from environmental legislation encouraging cleaner two-stroke fuels and lubricants, Gontha said. (das)