Kaltim Methanol secures market for its exports
JAKARTA (JP): PT Kaltim Methanol Industri, wholly-owned by the Humpuss Group, has secured an export market through a long-term off-take agreement with Nissho Iwai Co. of Japan, the company's president Abdul Wahab said yesterday.
Wahab said that Nissho Iwai, which arranged the offshore loans of some US$250 million for Kaltim Methanol, agreed to purchase 60 percent of the company's total output.
"We now have a captive export market for our products. So it should be good news for shareholders and lenders," Wahab said after signing an agreement with state-owned PT Pupuk Kalimantan Timur, which will supply Kaltim Methanol with 100 skilled laborers.
Wahab said that Kaltim Methanol's plant in Bontang, East Kalimantan, has an annual capacity of 660,000 tons of methanol and will start commercial production in December next year.
"We expect that by that time methanol prices in the region will rise to some $200 per ton from the current level of $170 a ton," Wahab said, adding that methanol sold for $500 a ton in 1994.
Demand
He said that demand for methanol in the Asia-Pacific region is expected to rise while supply is expected to remain stable. He added that there are only a few suppliers of methanol in the region, including Malaysia, New Zealand and Indonesia.
He said methanol demand in the region will remain high, citing that Japan alone needs two million tons per annum. Most of Japan's methanol needs are met by firms in the Middle East.
Indonesia imports some 150,000 tons of methanol per annum. The country's only methanol plant, operated by state-owned oil and gas firm Pertamina, is run below capacity while domestic demand stands at some 400,000 tons per annum.
Pertamina's methanol plant on Bunyu Island, also in East Kalimantan, has a production capacity of 330,000 tons per year. It runs below capacity because of its out-of-date machinery and lack of gas supply, the raw material for methanol production. It plans to build a gas pipeline network from Kalimantan to supply it with enough gas.
Meanwhile, natural gas for Kaltim Methanol will come from the nearby gas fields of Pertamina, Total Indonesie, Unocal and Vico.
It is forecasted that the domestic demand for methanol will increase an average of 9 percent per annum. By the year 2,000, Indonesia will need between 650,000 tons and 700,000 tons of methanol per annum.
Methanol is used as a solvent, anti-freeze, refrigerant and chemical intermediate and is a major component for the production of plywood glue. One-third of the world's methanol consumption is for the production of formaldehyde, the major use of which is to produce phenol, urea, melamine resins and plastics. (rid)