Hashim to build $2.3b petrochemical complex in E. Java

Hashim to build $2.3b petrochemical complex in E. Java

JAKARTA (JP): A joint venture of Indonesian, Thai and Japanese
companies signed an agreement yesterday to develop a US$2.3
billion olefin and aromatic plant in Tuban, East Java.

"The complex, scheduled for completion by mid-1999, will be
the largest of its kind in Indonesia," Hashim S. Djojohadikusumo,
chief executive officer of PT Tirtamas Majutama, said.

The joint venture, PT Trans-Pacific Petrochemical Indotama, is
10 percent owned by Tirtamas, 60 percent by PT Trans Pacific
Petrochemical Ltd. (a Tirtamas' affiliate), 20 percent by a
subsidiary of Thailand's Siam Cement Public Company Ltd and 10
percent by Japan's Nissho Iwai Corporation.

Hasjim said the plant would produce three million metric tons
of olefin and aromatics annually.

State-owned oil and gas company Pertamina would provide 98,000
tons of condensate a day to feed the plant.

Other feedstock not available in Indonesia would be supplied
by Koch Industries subsidiary U.S. Koch Refining International.

Hashim said $1.75 billion would be raised in loan facilities
from financial institutions including the U.S. Export Import
Bank, Japan's Export Import Bank, BA Asia, the Hong Kong-based
merchant banking arm of Bank of America and local banks, as well
as several Japanese trading companies.

BA Asia would underwrite loan facilities, he said.

"Financial closing is expected to take place in the third
quarter of 1997," he said.

The plant would be built by a consortium involving JGC
Corporation of Japan and three American companies; Stone &
Webster Engineering Company, AEC International Projects Inc and
Process Engineers Incorporated.

PT Chandra Asri is Indonesia's sole producer of olefin,
producing 650,000 tons of propylene and 322,000 tons of ethylene
annually.

BP Chemicals Ltd recently announced that it, along with the
Salim group and four Japanese companies, planned another plant in
Merak, West Java with an annual capacity of 700,000 tons of
ethylene and 300,000 tons of propylene. Commercial production was
scheduled for 2000.

Domestic demand for ethylene would increase from 800,000 tons
to 1.7 million tons annually by 2000, while demand for propylene
would be up from 650,000 tons to one million tons annually by
2000, BP Chemicals said.

Minister of Investment Sanyoto Sastrowardoyo said at
yesterday's ceremony Indonesia would need four olefin plants to
fulfill domestic markets by 2000.

Ethylene and propylene are used in textiles, fibers, plastics,
cosmetics, paint, piping, brake fluid, antifreeze and others.

Hashim said most of the olefin and some aromatic products
produced would be sold to downstream facilities it would develop
at the complex.

The four downstream facilities, valued at $800 million, were
a polyethylene plant with an annual capacity of 180,000 tons, a
low-density polyethylene plant with an annual capacity of 300,000
tons, a polypropylene plant with an annual capacity of 200,000
tons and a monomer plant with an annual capacity of 500,000 tons.

"Downstream facilities are scheduled for completion at the
same time as the plant," he said.

Koch Refining International, he said, was also interested in
buying some of the plant's aromatic products. (jsk)