Ferrostaal inks Letter of Intent for downstream petrochemical project in West Papua

11-Mar-13
Ferrostaal has signed a Letter of Intent with the Ministry of Industry of the Republic of Indonesia on cooperation for the development of a downstream petrochemical investment project in the West Papua region of Indonesia. A petrochemical plant complex for the production of methanol, propylene and polypropylene from natural gas is due to go into production in the Teluk Bintuni Regency in 2019. Ferrostaal’s role in the project is that of project developer and investor, in addition to which it will be responsible for structuring the investments planned by the foreign and local Indonesian investment partners. According to the Letter of Intent, the allocation of the principal gas supply from local reserves as well as the allocation of building land within an industrial park planned by the Ministry of Industry of the Republic of Indonesia in Teluk Bintuni will follow within the next months. “The project promises significant economic benefits for the Indonesian market thanks to the high level of value added in the country. Firstly, use of the end products for its own market will enable Indonesia to save up to US$600 million annually on imports. Furthermore, the high technical standards of the plant complex will ensure a technology transfer and safeguard long-term jobs for up to 3,000 direct and indirect employees. This is about four times the number that would be created by, for example, the production of liquefied natural gas (LNG),” says Klaus Lesker, Managing Director of Ferrostaal GmbH. After completion of the plant, annual output is expected to be in the region of 400,000 tons of polypropylene. The plastic as well as the by-products petrol (approx.150,000 tons) and liquefied natural gas (approx. 34,000 tons) are to be sold on the local market in order to meet the growing local demand and support growth in the country through this import substitution. The project supports the implementation of a master plan adopted by the Republic of Indonesia (MP3EI), which provides for sustainable industrialisation in the period to 2030 in order to accelerate economic development, particularly in the east of Indonesia. Indonesia will particularly benefit from the alternative polypropylene production technology. Production will be based exclusively on local natural gas from reserves in West Papua, which have the potential to keep the plant complex supplied for at least 25 years.
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