LG to allocate US$13 bln for petrochemical plant in Papua, Indonesia

11-Aug-14

LG International will allocate up to US$13 bln to build and operate a petrochemical complex in the Bintuni industrial area in West Papua, as per The Jakarta Post. The petrochemical plant would have the capacity to produce one billion tons of methanol a year. However, LG would require a guarantee from the government to get enough supply of gas before starting the project. Before the three-year construction of the facility commences, Kang said that the company would require at least one year for “deeper study”, to decide on the appropriate licensing and to locate natural gas supply. The conversion of 2,300 hectares (ha) of conservation land for the Bintuni complex is currently awaiting approval from the Forestry Ministry. The ministry’s manufacturing industry director, Harjanto said the common facility would be shared by LG, German petrochemical company Ferrostaal Industrial Projects and state-owned fertilizer company PT Pupuk Indonesia in order to cut infrastructure costs. Building infrastructure is costly, so we see this as an opportunity for integration and optimization of investments among the companies,” Harjanto said, “If everyone builds their own power plants, it would take up all the land. If one power plant is shared among companies, it will be more efficient. The idea is to integrate the petrochemical and fertilizer industries so their byproducts can also be shared among them.” To support its operations, Harjanto said that LG would need 91 million standard cubic feet per day (MMSCFD) of natural gas, which would bring the total gas consumption of Bintuni up to approximately 202 MMSCFD. There are about 48 trillion cubic feet of gas reserves that have already been identified in the area. He also said that the ministry would soon be signing a memorandum of understanding (MoU) with LG that would clarify the terms of their partnership, including those related to gas allocation.