G

erman engineering firm Ferrostaal AG announced plans to build a petrochemical plant in West Papua at a cost of US$900 million, a senior company executive says.

“The investment is about $900 million but it can change depending on the project and everything needed, including the gas supply,” Ferrostaal petrochemical division senior executive manager Soenke Gloede said after a breakfast meeting with a forum of industrial gas users in Jakarta hosted by the Industry Ministry on Friday.

Gloede said his firm planned to procure gas for the plant from the Tangguh LNG plant to support the operation of the plant, which would produce methanol and dimethyl ether (DME).

Gloede said he expected his company to complete all planning and preparation in the next one or two years and start construction in 2013. The plant, set to commence operations in 2016, would produce around 1 million tons of methanol and up to 200,000 tons of DME annually.

He said the methanol will be sold both domestically and exported, while the DME, which can be used as an alternative to liquefied petroleum gas (LPG), would be sold on the domestic market.

Industry Minister MS Hidayat said the operation of the petrochemical plant was feasible because it could receive supplies of gas from the Tangguh field.

The Tangguh LNG plant in Papua, along with the Arun plant in Aceh and the Bontang plant in East Kalimantan, are the largest contributors to the country’s LNG production.

“It is very possible to develop a petrochemical industry there. Papua is also a site where we want to develop an oil and gas-based industrial cluster,” he said.

Hidayat said he would discuss Ferrostaal’s investment plans with the President and Cabinet ministers in Bogor, West Java, on April 18-19.

Earlier this year, President Susilo Bambang Yudhoyono, Coordinating Minister for the Economy Hatta Rajasa and National Development Planning Minister Armida Alisjahbana launched an economic master plan to grow the economy by 7 to 8 percent per year from 2013 to 2025.

The plan covers the development of six economic corridors throughout the archipelago: Sumatra, Java, Kalimantan, Bali and Nusa Tenggara, Sulawesi, and the Papua and Maluku corridors.

Economic growth in the Papua and Maluku corridor is targeted to increase six-fold by 2030. However, this would require infrastructure, such as a trans-Papua highway, including to Merauke, Jayapura and Merauke ports, and the coal-fired power plant in Urumka.