Giants join for petrochemical complex
All output to serve fast-rising demand of Indonesia market
PTT Global Chemical has signed a tentative deal with Indonesian oil and gas company Pertamina to develop a petrochemical complex in Indonesia worth up to Bt150 billion.
The two companies signed the heads-of-agreement deal yesterday in Thailand to determine the framework of their collaboration to study details of investment and a business plan, and to set up a joint venture to establish the petrochemical complex, said PTTCG chief executive officer Anon Sirisaengtaksin.
The complex will comprise a refinery, an olefin plant with capacity of 1 million tonnes per year, and a downstream polymer plant, all to serve the fast-rising demand of Indonesia's market.
The cost of the establishing the complex will be US$4 billion to $5 billion (Bt117 billion to Bt147 billion). Pertamina will own 51 per cent of the project, while the Thai partner will hold the remainder.
Of the total investment, 50 per cent will be financed by loans. Of the rest, each of the two partners will contribute about $1.2 billion. Anon added that PTTCG had sufficient cash flow to finance the project.
The joint venture serves part of PTTCG's strategy of boosting its strength by expanding its regional market. It is possible that in the future PTT Group and Pertamina will expand their collaboration in other business areas.
Pertamina president and CEO Karen Agustiawan said the olefin plant planned under the deal was expected to be up and running by 2017.
After this the company will also discuss with PTT Exploration and Production the possibility of collaboration on the exploration of new petroleum fields.
Besides Pertamina, PTT Group is also interested in partnership deals with other global oil giants. PTTCG is in talks with China's Sinochem group to explore the possibility of setting up a polyurethane plant with production capacity not lower than 300,000 tonnes per year. The talks are expected to be wrapped up in June.
During the past two months the prices of petrochemical products have been higher than last year.
While PTTCG will conduct refinery-plant maintenance for 30-40 days in the middle of this year, its olefin production will be continued at full steam, which means its revenue will not be affected, it says. Though olefin contributes only 30 per cent of total revenue, it contributes 70 per cent of total net profit. Olefin fibre is used in ropes and car interiors.
The company expects that its revenue this year will not be lower than last year's, which stood at Bt550 billion.