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)