PT Medco to export methanol to South Korea

JAKARTA (JP): Methanol producer PT Medco Methanol Bunyu, a subsidiary of publicly listed oil and gas company Medco Energi Corporation, has signed a long-term purchase agreement with a South Korean state chemical producer, the company said.

Medco Methanol's president Robby J. Rompis said over the weekend the South Korean company would buy between 50,000 metric tons and 100,000 tons of methanol annually from Medco to produce chemical urea.

He refused to name the South Korean company and did not say when the contract was signed.

Rompis said Medco would produce 300,000 tons of methanol this year, up from 181,000 tons last year, at its plant on Bunyu island, East Kalimantan.

The company sold most of its methanol on the domestic market last year but would export 40 percent of its products this year to offset the declining demand in the country following the economic crisis.

Methanol is used for the making of formaldehyde, solvents, acetic acid and glue for plywood, with the largest demand in the country coming from the plywood industry.

But the economic crisis which has swept through the region since mid last year has considerably weakened regional demand for the country's plywood.

The Association of Indonesian Wood Panel Producers earlier said 30 plywood producers, accounting for almost a third of the country's 112 plywood producers, had closed down.

Rompis said there was a rising demand for methanol from formaldehyde producers in the region amid the declining demand from the plywood industry.

"Aside from selling to our contract buyer in South Korea, we shall also sell our methanol on regional spot markets this year," Rompis said.

Methanol's price has declined to between US$100 and $135 per ton over the past six months, compared with last year's price of between $220 and $250 per ton.

The Bunyu methanol plant, the country's first methanol plant, belongs to state oil and gas firm Pertamina. Medco has revamped it and began operating it in April last year on a 20-year joint operation contract with Pertamina.

Another methanol plant in the country is situated in Bontang, East Kalimantan, owned by PT Kaltim Methanol Industri, a subsidiary of publicly listed shipping company PT Humpuss Intermoda Transportasi. The plant, which started operation early this year, has an annual production capacity of 660,000 tons of methanol. (jsk)