Chandra Asri, Peni sign 5-year contract

JAKARTA (JP): PT Chandra Asri Petrochemical Center has signed its biggest ethylene supply contract with polyethylene producer PT Peni.

"Under the terms of the agreement, Chandra Asri will pipe 140,000 tons of ethylene each year to Peni's plant in Merak for five years," Chandra Asri's vice president and chief executive officer, Peter F. Gontha, said yesterday.

Chandra Asri, which was granted permanent tariff protection of 25 percent by the government last week for both its ethylene and propylene products, is jointly owned by businessmen Prajogo Pangestu, Henry Pribadi and Bambang Trihatmodjo -- President Soeharto's second son -- and Marubeni, Toyo Engineering and Showa Denko of Japan.

Peni is 51 percent owned by British Petroleum Chemicals, with the remaining shares held by President Soeharto's eldest son, Sigit Harjojudanto, and his associates.

Saying that the ethylene supply will begin flowing through the pipeline from Oct.1 this year, Peter noted the agreement also allows Peni to increase the supply to 200,000 tons per year from January 1998.

"We also signed a spot sales deal for August and September," he said, adding that from August this year his company's propylene and ethylene production will be totally absorbed in Indonesia.

"Tri Polyta Indonesia continues to be our sole customer for propylene, while Peni now joins PT Asahimas Subentra Chemicals, PT Yasa Ganesha Pura, PT Sulfindo Adiusaha and PT Styrindo Mono Indonesia as our ethylene customers," he said.

Peter noted that owing to the agreement, his company can immediately operate at full capacity once the plant resumes operation after a temporary shutdown.

The chemical producer announced last month that it will halt its operations for 47 days from June 15 for a plant maintenance turnaround.

For Peni, he said, the deal means reliable supplies of about half its total ethylene requirements at the turn of a tap, with considerable savings in import costs and associated benefits for Indonesia.

The first Indonesian olefin producer, which started operation in May 1995 with a total investment of US$2 billion, has a designed capacity of 510,000 tons of ethylene per year, 240,000 tons of propylene, 300,000 tons of polyethylene and 216,000 tons of pyrolysis gasoline.(13)(