INDONESIA: Chandra Asri Petrochemical to invest USD 380 million in next two years

Paramate Nisagornsen, Chandra Asri's vice president director, said the company was considering a combination of loans and secondary stock offerings to finance the project. "The company is currently finalizing funding sources that is cost effective and efficient,” he said.

Chandra Asri signed a contract with Toyo Engineering Corporation on Friday (13 Sept. 2013) for engineering, procurement, and construction works of the expansion, which is expected to begin by the end of this month.

The company will add several furnaces and upgrade naphtha cracking equipment at its plant in Cilegon, Banten, and the expansion is expected to boost its capacity to turn naphtha into simpler hydrocarbons by 43 %.

Chandra Asri targets the expansion to be online by 2015, said Paramate.

"The increase of naphtha cracker production capacity is a part of Chandra Asri's strategic plan to strengthen its position as a key player in the integrated petrochemical industry not just in Indonesia but also the region,” Paramate said.

The new facility, in turn, will increase Chandra Asri's capacity to produce ethylene to 860,000 tons per year from 600,000 tons currently. Its propylene production capacity will also increase to 470,000 tons from 150,000 tons.

Production of Pyrolysis-gasoline, or Pygas - which can be used for gasoline blending - will rise by 120,000 tons to 400,000 tons annually, while output of Mixed C4, a feedstock used to make other chemicals, will rise by 95,000 tons to 315,000 tons.

With the increase in production capacity, Chandra Asri will be more self-sufficient in supplying of propylene as raw material for polypropylene for its plant, as well as securing Mixed C4 supplies for a butadiene plant operated at its subsidiary Petrochemicals Butadiene Indonesia.

In addition, a sizable Pygas supply will also vindicate its case to build a factory that can produce BTX (benzene, toluene and mixed xylene). Benzene is one of the raw materials to produce styrene monomer, which is manufactured by Chandra Asri's subsidiary Styrindo Mono Indonesia. In June, Chandra Asri abandoned a USD 200 million joint venture plan with state energy firm Pertamina for a polypropylene plant.

Source: Daily "The Jakarta Globe", Jakarta; 16 Sept 2013(Syed Rashid Ali, Karachi, Pakistan)