Chandra Asri, Peni sign 5-year contract

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)(