Hidayat Vows Assurance on Petrochemical Plant in Papua


By Tito Summa Siahaan on 9:27 am August 23, 2013.
Category Business, Corporate News
Tags: Industry Minister M.S. Hidayat, papua investment


Industry Minister M.S. Hidayat has pledged government help for investors in order to realize plans to build a massive petrochemical complex in West Papua.

Hidayat on Thursday met with senior managers of German industrial giant Ferrostaal, which, together with Indonesia’s Chandra Asri, plans to build a $2 billion petrochemical facility in Bintuni Bay, West Papua, but is waiting for assurances on natural gas supply.

Other companies, including South Korea’s LG International and state-owned fertilizer producer Pupuk Indonesia, plan to invest in Bintuni Bay, which could lead to the development of a $7 billion petrochemical complex.

The proposed development is situated near the BP-operated Tangguh liquefied natural gas plant, which is currently undergoing a $12 billion expansion to boost capacity by 50 percent from the present 7.6 million tons of LNG available through existing facilities.

Tangguh serves several fields that are estimated to have combined reserves of 14.4 trillion cubic feet.

Hidayat said the Bintuni project is important for West Papua and Indonesia as a whole. “These investors plan to invest in a difficult area, and if we don’t give them assurances on gas supplies then it reflects badly on us,” Hidayat said.

The petrochemical industry depends heavily on natural gas. Bintuni Bay, Hidayat said, requires at least 180 million metric standard cubic feet a day.

“I told them to give me a month [to deliver the assurance]. That is my responsibility,” the minister said, adding that he would meet with Coordinating Minister for the Economy Hatta Rajasa to discuss the matter.

He said Ferrostaal has already concluded a feasibility study on the project, which found “it would not be valid unless there is an assurance of natural gas supply.”

Gde Pradnyana, the secretary of upstream oil and gas regulator SKKMigas, said the timing of an assurance to investors depends on the progress of the Tangguh expansion.

“The Environment Ministry has rejected one environmental impact analysis submitted by the operator for a third [energy] train following concerns from the public,” he said.

Ferrostaal says on its website it has several decades of experience in Indonesia. Shares in Chandra Asri closed unchanged at Rp 3,050 in Jakarta on Thursday.

The Jakarta Globe