MOSCOW (MRC) -- The Ministry of Industry has prepared a number of incentives for integrated upstream and downstream petrochemical industries in an effort to increase the added value and contribute towards the economy, reported GV.
"The downstream industrial products will have added value of up to USD500,000 per ton if we can make it integrated," Director General of Manufacturing Industry Base Harjanto said in Jakarta.
Speaking at the Refining & Petrochemical Innovation Conference, Harjanto said Indonesia’s chemical industries have yet to achieve their maximum production potential. This is because USD300 million worth of raw materials required for production are still imported.
He said that the upstream industry must be reinforced because many by-products from the chemical industry could be utilized by downstream industries, thus adding value.
Harjanto said the upstream petrochemical products in Indonesia included polyethylene (PE), polypropylene (PP) and styrene monomer (SM)/butadiene. About 14 other products could also be developed. The development of an integrated upstream industry needs a huge investment while, typically, it is an industry with slow yields, and needs sweeteners to make it attractive.
Investors will not be attracted if the indicator of investment worthiness, such as the International Rate of Return (IRR), is still below 12.
Vice President of PT Chandra Asri Petrochemical, Corporate Relations, Suhat Miyarso said the plan of state-owned oil and gas company Pertamina to build eight refinery plants for petrochemicals in 2016 will help create integrated upstream industries.
As MRC informed earlier, in March 2015, Chandra Asri Petrochemical is reportedly planning to build a naphtha refinery at its Cilegon complex in Banten, Indonesia, with an estimated investment of USD740m. The company is now undertaking a one year preliminary study for the proposed project, which would reduce its reliance on naptha imports. Chandra Asri plans to finance the preliminary study using USD250m funds allocated for capital expenditure this year. The funds will also be used to finalise the USD380m expansion of a naphtha cracker at the Cilegon complex to increase ethylene production capacity to 860,000 kilotonnes. It will also facilitate construction of a synthetic rubber plant in partnership with French firm, Michelin.
MRC