German petrochemical company Ferrostaal Industrial Projects GmbH and Jakarta-listed PT Chandra Asri Petrochemical have agreed to work on studies for the development of a petrochemical plant. Under an agreement, Ferrostaal and Chandra Asri will develop a methanol-based olefin production complex in Teluk Bintuni in West Papua, with a total investment amounting to US$1.89 billion. The complex is expected to produce up to 400,000 tons of polypropylene and 175,000 tons of ethylene annually. However, the project is dependent on feasibility studies as well as gas allocation and prices from the Energy and Mineral Resources Ministry. Ferrostaal and Chandra Asri will cooperate with the Industry Ministry on the feasibility studies. “We are still on the agreement on feasibility studies. [What comes next] will depend on whether we will get the gas allocation,” Chandra Asri president director Erwin Ciputra said after the agreement signing at the Industry Ministry.
Gas supply for the complex is expected to be provided by the Tangguh liquefied natural gas (LNG) plant also in West Papua. Both Ferrostaal and Chandra Asri have not determined the allocation of their relative share-holdings in the putative joint venture that would work on the planned project. The production complex is expected to be ready for operation by 2019.