Ferrostaal supported downstream petrochemical investment project in West
Papua, Indonesia. This was stated when accompanying President Susilo Bambang
Yudhoyono’s visit to Germany where Minister of Industry, M.S. Hidayat, and Head
of Investment Coordinating Board (BKPM), Chatib Basri, witnessed the signing of
a Letter of Intent (LoI) between Director of Ferrostaal GmbH, Klaus Lesker, and
Director General of Manufacturing Industry Basis at the Ministry of Industry,
Panggah Susanto, in Essen, Berlin on Monday (3/4). The Letter of Intent is for
the cooperation on investment project construction.
In the Letter of Intent, a petrochemical plant complex will go into
operation in Teluk Bintuni Regency, West Papua by 2019. For construction of
methanol, propylene, and polypropylene from natural gas factory and its
supporting infrastructures an estimated total investment of USD2 billion is
needed. Ferrostaall’s role in the project is as developer and investor. In
additional to that, Ferrostall will also structure investment planned by
foreign and local Indonesian investment partners.
According to the Letter of Intent, allocation of principal gas supply
from local natural reserves as well as allocation of building land within an
industrial park in Teluk Bintuni planned by the Ministry of Industry will
follow in the next moths.
According to Klaus Lesker, this project promises significant economic
benefits for the Indonesian market due to the high level of value added in the
country. “Firstly, Indonesia will save up to USD600 million a year on import as
it uses its own end products for its own market. Furthermore, the high
technical standard of the plant complex will support technology transfer and
guarantee long-term jobs.
“The project is predicted to absorb 3,000 direct and indirect employees.
This is about four time of job vacancy created by production of liquefied
natural gas (LNG)”, Lesker said. After the completion of the plant, the output
is expected to reach 400,000 ton of polypropylene a year. Synthetic materials
as well as gasoline by-products (approximately 150,000 ton) are to be sold in
the local market in order to meet growing local demand and to support growth in
the country through this import substitution.
Polypropylene is the second most important synthetic material in the
world after polyethylene. In Indonesia, this material is primarily used in the
plastics industry for the production of containers, but is also increasingly
used in the automotive and furniture industries. This project supports the
Masterplan for Acceleration and Expansion of Indonesia’s economy (MP3EI) which
is aimed at creating a sustainable industrialization up to year 2030 in order
to accelerate economic development, particularly benefit from alternative
propylene production technology. The production process will exclusively be
based on local natural gas from natural reserves in West Papua, which have the
potential to supply to the plant complex for at least 25 years.
There has also been a gas allocation approval for development of
petrochemical industry in Teluk Bintuni, West Papua Stage I of 180 MMSCFD for
the construction of urea fertilizer factory with a capacity of 2 million
ton/year.(E)
Business News March 08,2013
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