Joint venture to build $70m lube oil plant

JAKARTA (JP): State oil and gas company Pertamina has set up a joint venture to build a US$70 million lube oil blending plant in North Jakarta to add to the domestic supply.

Pertamina president Soegianto said yesterday the joint venture, PT Pertajaya Lubrindo, would produce 100,000 kiloliters of lubricant and 8,000 kiloliters of grease oil a year at its production facilities at the Nusantara industrial bonded zone in Marunda.

The plant was expected to begin operations in early 1999, Soegianto said during the groundbreaking ceremony of the plant.

Soegianto said the country's demand for lubricants was 400,000 kiloliters per year with an average growth of 2 percent a year. Pertamina's lubricant plants supplied 95 percent of demand while the other 5 percent was imported.

"This plant is expected to cover domestic demand for imported lubricants," he said.

He said the project had received approval from the Investment Coordinating Board in April 1996.

Soegianto said Petrajaya Lubrindo was Pertamina's first joint venture with private partners to produce lubricants.

The joint venture is 40 percent owned by Pertamina, 30 percent by Mobil Oil and 30 percent by PT Citra Pelumas Andalan.

Citra Pelumas is a consortium made up of four companies: PT Binajasa Hantarindo, a subsidiary of PT Bimantara Citra, controlled by President Soeharto's son Bambang Trihatmodjo; PT Kartika Eka Paksi Utama, a business wing of Army foundation Yayasan Kartika Eka Paksi; PT Yekapepe Usaha Nusa, a business wing of Pertamina's Employee Welfare Foundation; and an independent company PT Prizaco Perkasa.

Soegianto said Pertamina also planned to develop two other lubricant plants in Medan, North Sumatra, and in Ujungpandang, South Sulawesi.

The Medan plant will be built by a joint venture of PT Caltex Pacific Indonesia and the Ujungpandang plant by a joint venture of the Chinese Petroleum Company.

Petrajaya Lubrindo president Pian Tandjoeng said under the agreement the lubricants and grease produced by the company would carry the Pertamina and Mobil brand names.

He said Mobil and Citra provided $14 million in equity for the joint venture, while Pertamina provided $10 million in land for the plant. (jsk)