Petrochemical Industry Development in West Papua

(image: www.kemenperin.go.id)

The country’s potential petrochemical sector in Bintuni is capable of attracting domestic and foreign investment. The construction of gas-based industries are expected to drive industry growth in Eastern Indonesia.

 

(image: www.kemenperin.go.id)
(image: www.kemenperin.go.id)

Petrochemical Industry, one of Indonesia’s most important industry is being rapidly developed in West Papua. Foreign companies have formed joint ventures with Indonesian partners. Ferrostaal, a global industrial services provider in plant construction and engineering from Germany has signed the MoU with Indonesia’s state-owned fertilizer producer PT Pupuk Indonesia which will cooperate in research to develop petrochemical plant worth $1.5 billion in Bintuni Bay, West Papua. Meanwhile, South Korean LG International Corp join with local partner PT Duta Firza ready to develop petrochemical plant after getting the assurance to get gas supply from Bintuni Bay and Masela Block in Maluku. The project is estimating need costs $1.3 billion and targeting to produce 1 million tons of methanol per year. The Petrochemical plant that will be worked on is estimated to take three years for the construction process. With operation target in 2021, LG plant would get 257 mmscfd supplied, by producing methanol, ethylene, propylene, polyethylene, and polypropylene. And by 2026 would get 90 mmscfd for ammonia plant.

(image: www.kemenperin.go.id)
(image: www.kemenperin.go.id)

Bintuni Bay is one of the regions that has largest material sources for petrochemical industry, with potential gas reserves of 23.8 trillion standard cubic feet (TSCF). The gas reserves in Bintuni are believed to be sufficient to meet the industry’s needs in the region. The Industry Ministry said that the institution will support gas allocation with given affordable price. The Petrochemical industry is one of the sectors which will obtain gas price decline as to the Presidential Regulation Number 40 Year 2016 on Natural Gas Price Fixing.

The investment development of the Bintuni Bay petrochemical industry and its derivatives industry is expected to contribute substantially to the strengthening of the national petrochemical industry. The Ministry of Industry wants the dependence on petrochemical imports of $10 billion per year to be reduced.

The Minister of Industry, Airlangga Hartarto said the government supported the acceleration of petrochemical industry development as it is in line with the government commitment to develop eastern part of Indonesia. Developing the domestic petrochemical sector will diversify the country’s economy, generate additional revenues, and create jobs. The government also developed basic infrastructure that focuses on affecting Papuans such as water, electricity, and port for the industry.

Keywords: West Papua, Petrochemical Industry, Ferrostaal, PT Pupuk Indonesia, Bintuni Bay, Petrochemical, Gas, Development, Government, Industry Ministry

By: Riska Azizah Y. (MaCDIS Researcher)