TPI seeks financial support from Pertamina for paraxylene expansion

20-Aug-09

Thai petrochemical major PT Tuban Petrochemical Industries (TPI) has sought financial support to expand its paraxylene plant to 1.2 mln tpa, from PT Pertamina. TPI requires US$500 mln for the expansion plan that it hopes to embark upon in H1-10. Pertamina holds 15% stake in TPI and is a state oil and gas company. Expansion is the need of the hour as paraxylene demand is growing continuously, and production will need to be boosted with the imminent implementation of a free trade agreement (FTA) between the Association of Southeast Nations (ASEAN) and China. Without expansion in domestic paraxylene output, once the CEPT (common effective preferential tariff) and the (ASEAN-China) FTA become effective (as the two agreements entirely scrap import duties on plastics, among other items), the domestic industry will suffer. The CEPT provides for tariff reduction schedules agreed as part of FTA arrangements among ASEAN members. A dearth of available finance is also coupled with lack of feedstock as the Energy and Mineral Resources Ministry was unable to give forward guarantees on the supply of required additional condensate feedstock. Hence TPI will have to consider sourcing sour condensate as raw material from Qatar.