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rivate oil and gas company PT Duta Firza will team up with Korea-based LG International to set up a petrochemical complex with a total investment of US$3 billion near the Tangguh gas field in West Papua.

On Wednesday, the two companies sealed the commitment through the signing of a heads of agreement (HoA) in Seoul, Korea, witnessed by Industry Minister MS Hidayat and Trade Minister Gita Wirjawan.

“The cooperation will cover pre-planning, pre-feasibility studies and the construction of the complex,” said Duta Firza chief executive officer Firlie Ganinduto after the signing as reported in a press statement sent to The Jakarta Post.

The pre-planning phase included securing gas supply from the Tangguh field, seeking financing for the project, looking for buyers for the petrochemical products and appointing contractors for the engineering, procurement and construction (EPC) project, he said.

Firlie explained his company and LG International would establish a joint venture company. The planned company would construct and operate the complex, he added.

The pre-panning and pre-feasibility study phases were expected to be completed in the third quarter of 2012, Firlie said. The follow up of those early phases will be conducted in the first quarter of 2013, while the ground-breaking will take place in mid 2014.

“The factory will utilize gas supply from Tangguh, particularly from the planned third and fourth trains [gas liquefaction and purification facilities] which are expected to begin commercial operations in 2017. Thus, we hope we can operate the complex by late 2017 or early 2018,” Firlie reported.

Tangguh is a massive gas project located in the Bintuni Bay area of West Papua, where there are total proven gas reserves of at least 14.4 trillion cubic feet. If production runs at 700 million standard cubic feet per day (mmscfd), the gas supply will last approximately 55 years.

BP, the operator of the Tangguh gas field and liquefied natural gas (LNG) plant, previously announced its plan to build the third train with a total capacity to produce 3.8 million tons of LNG per year.

Currently, the Tangguh LNG plant consists of two production units with a capacity of 3.8 million tons per year. BP started production at train one in February 2009, and at train two in July 2009.

Separately, upstream oil and gas regulator BPMigas spokesperson Gde Pradnyana revealed that part of the third train would be allocated for petrochemical factories, however there was no firm commitment yet that the supply was for Duta Firza and LG.

“We have just decided to build the third train, while for the fourth train, the gas supply is not available yet,” he said.

As reported earlier, the Industry Ministry estimated that the first phase of the petrochemical industrial estate will require around 382 mmscfd of gas to fuel two urea plants with a total production capacity of 3,500 tons per day, two ammonia plants with a production capacity of 2,000 tons per day and a methanol plant. Meanwhile, the second phase of the project will need around 200 mmscfd of gas to develop a diesel plant.