Koch Industries Inc. buys 5% stake in Trans-Pacific

Koch Industries Inc. buys 5% stake in Trans-Pacific

JAKARTA (JP): Koch Industries Inc, a major petrochemical
company of the United States, has acquired a 5 percent stake in
PT Trans-Pacific Petrochemical Indotama (TPPI).

TPPI said yesterday that the American company bought the 5
percent stake through its wholly owned subsidiary.

TPPI is developing a US$2.5 billion olefin and aromatic
facility in Tuban, East Java, with an annual capacity of over 3
million metric tons.

In addition to Koch, TPPI is 10 percent owned by PT Tirtamas
Majutama, 55 percent by PT Trans-Pacific Petrochemical Ltd (a
Tirtamas affiliate), 20 percent by Tuban Petrochemicals Pte Ltd,
a subsidiary of Thailand's Siam Cement Public Co Ltd, and 5
percent each by Japan's Nissho Iwai Corp and Itochu Corp.

TPPI president Hashim S. Djojohadikusumo said his company was
pleased to welcome the new partner with its outstanding
reputation and capabilities.

"Koch's criteria for investment is consistent with existing
sponsors' goals of developing an efficient, low-cost producer of
petrochemicals for one of the world's fastest growing markets,"
he said.

The olefin and aromatic facility is part of a larger
petrochemical complex, which includes several associated
downstream petrochemical facilities currently being developed at
the Tuban site by companies owned largely by the Tirtamas Group.

Hashim, who is also chairman and chief executive officer of
the Tirtamas Group, said the complex, scheduled for completion by
mid-1999, would be the largest of its kind in Indonesia.

TPPI vice president Honggo Wendratno said that in addition to
Koch's equity participation, its affiliates would be providing
technical services, feedstock, petrochemical marketing and
trading capabilities to the project.

He said Koch's affiliates would also provide technical
services and expertise to train TPPI employees, help operate the
condensate splitter and aromatics unit and work with TPPI to
develop an optimization model for the entire complex.

Over the next few months, Koch's affiliates will move several
experienced engineering, operations and management personnel from
its U.S. facilities to the complex site, he added.

Koch Refining International Pte Ltd, a Singapore affiliate of
Koch Industries, through its global feedstock trading operations,
will be the exclusive supplier of feedstock -- primarily
condensate -- to the facility.

The Singapore-based company will also market 50,000 metric
tons of paraxylene from the complex every year to Asian and
international markets, in addition to marketing aromatic products
produced by the facility that are not sold in Indonesia.

The plant will have an annual production capacity of three
million metric tons of olefins and aromatics and other
petrochemical products, including 700,000 tons of ethylene,
380,000 tons of propylene and 500,000 tons of paraxylene.

It is being built by a consortium involving JGC Corp of Japan,
and three American companies: Stone and Webster Engineering Co,
AEC International Projects Inc and Process Engineers Inc.

According to data from BP Chemicals, domestic demand for
ethylene will increase from 800,000 tons to 1.7 million tons
annually by 2000, while demand for propylene will be up from
650,000 tons to one million tons annually by 2000.

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

Hashim said early this year that most olefin and some aromatic
products would be supplied to the downstream facilities of the
complex. (08)