PT Chandra Asri to halt production for six weeks

JAKARTA (JP): The PT Chandra Asri Petrochemical Center is to halt its production activities for 42 days from June 12 to complete preparations to increase its design capacity.

"We hope that we'll resume operations in August with a bigger production capacity," the company said in a statement over the weekend.

According to the statement, the only ethylene producer in Indonesia, plans to increase its production to a pre-engineered level of between 670,000 and 720,000 tons per year. It did not elaborate.

Currently Chandra Asri, which started operation in May 1995 with a total investment of US$2 billion, has a design capacity of 510,000 tons of ethylene per year, 240,000 tons of propylene, 300,000 tons of polyethylene and 230,000 tons of pyrolysis gasoline.

The statement said that the chemical firm will award a contract for the building of two fireboxes in its cracker. "With these two fireboxes, we'll increase our production capacity of polyethylene to fulfill the rising demand on the local market," it said.

Commenting on the planned expansion, Chandra Asri's chief executive officer Peter F. Gontha noted that the temporary shutdown would take place as the prices of ethylene and propylene were increasing.

"We'll certainly lose this encouraging momentum. But we want to increase our capacity to meet the local demand," he said.

Peter said that by the expansion, Chandra Asri will be able to enlarge its contribution of saving Indonesia's foreign exchange for imports.

He claimed that with the current design capacity, his company can help the country save about $700 million in foreign exchange spending per year if local midstream industrial plants buy all their materials from the firm.

Chandra Asri, which was granted tariff protection of 25 percent for both its ethylene and propylene products in February, is jointly owned by businessmen Prajogo Pangestu, Henry Pribadi and Bambang Trihatmodjo -- President Soeharto's second son -- and Marubeni, Toyo Engineering and Showa Denko of Japan.

During the first year of operations, Chandra Asri manufactured 322,000 tons of ethylene, 185,000 tons of propylene, 160,000 tons of pyrolysis gasoline and 178,000 tons of polyethylene.

The company has sold its propylene production entirely to PT Tri Polyta Indonesia, Indonesia's largest polypropylene producer which is owned by Prajogo Pangestu, Bambang Trihatmodjo and their business associates.

Eighty percent of its ethylene production is sold to local companies operating at its production base in Cilegon, West Java, while the other 20 percent is exported.

The company's pyrolysis gasoline has all been exported for further processing overseas.

The company procures its condensate feedstocks from the Kangean gas field off East Java and naphtha from the Cilacap oil refinery in Central Java and from the Middle East. (13)