Top petrochemical firm Chandra Asri Petrochemical will build a US$150 million liquefied petroleum gas (LPG) terminal in Cilegon, Banten, with Vopak Pte. Ltd of Singapore.
Chandra Asri will provide the land bank, port facility, utility and other infrastructures, which they currently own, while Vopak will be responsible for the construction of the terminal, Chandra Asri president director Erwin Ciputra said in a written statement on Monday.
“The terminal operational works will be organized by a joint venture entity between Chandra Asri and Vopak, which is still in the formation process and expected to be finished soon,” he said.
Erwin expected the LPG terminal to help boost the firm’s production capacity because it will provide diversification of raw material to Indonesia’s No. 1 petrochemical firm.
“The LPG channeling and distribution capacity of the terminal are expected to reach one million tons per year,” he said in the statement.
“Aside from the strategic gain for Chandra Asri, the terminal could also be used to distribute LPG to other industrial sectors.”
Construction of the terminal is expected to begin at the end of this year, while operational activities are targeted to kick off in 2014.
The LPG terminal will help Chandra Asri diversify its raw material needs from focusing only on naphtha hydrocarbons for its olefin factory. The firm said it needs 1.7 million tons of naphtha per year to support its production activity.
Chandra Asri expects polypropylene production capacity to increase to 480,000 tons per year from 360,000 tons, ethylene to 1 million tons from 600,000 tons, and polyethylene to 540,000 tons from 320,000 tons in the next three to five years.
“The LPG terminal will also be part of Chandra Asri’s efforts in business expansion to up production capacity,” Erwin said.
Chandra Asri’s olefin factory is the petrochemical industry’s upstream stage. Both naphtha and LPG are processed to produce ethylene, which is the raw material for polyethylene, propylene, and polypropylene. Final products of the three raw materials in the downstream stage include various plastic-based household products.
“With the terminal, Chandra Asri’s [olefin] factory will use LPG as an alternative raw material amounting in 10 to 15 percent of the total needs. Therefore the factory’s operations will be more flexible and not rely on naphtha alone,” Erwin said, adding that the LPG could also be used as an energy source for operational and production activities at Chandra Asri’s factory.
“The LPG terminal could also be used to serve LPG distribution to fulfill the needs of the industry and other business sectors. Therefore, LPG distribution, especially for Banten and its surrounding areas, is expected to be smoother.”
Chandra Asri is a newly merged firm between two affiliated petrochemical companies, Chandra Asri and Tri Polyta Indonesia. Both are affiliated with Prajogo Pangestu’s Barito Pacific.
Shares in Chandra Asri remained unchanged at Rp 3,800 (US$4.26) at Monday’s close. The shares, coded PTIA, gained 53.53 percent in the past year, outperforming the broader Jakarta Composite Index’s (JCI) 35.72 percent jump. The firm has a total market capitalization of about Rp 11.65 trillion.