Taiwan CPC, Pertamina sign $8.33 bil. petrochem plant agreement

09, Jun. 2020

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TAIPEI, NNA - Taiwan’s state-run energy group CPC Corp. and Indonesia's PT Pertamina have signed a NT$250 billion ($8.33 billion) agreement to jointly develop a petrochemical plant in Indonesia.

Expected to open in phases from 2022 till 2026, it will cater to the anticipated development boom in Southeast Asia's largest economy in the coming years.

To be built at an existing refinery in Balongan in West Java Province, the naphtha cracking plant will generate an annual output of 1 million tons of ethylene upon completion, CPC Vice President Fang Jeng-zen told NNA on Tuesday.

CPC and the state-backed Pertamina will each own a 45 percent stake while the remaining 10 percent will be reserved for interested parties such as suppliers, said Fang.

Indonesia recently announced 89 priority projects worth $97 billion to be implemented over four years. A mega project is state-owned Pertamina’s plan to upgrade its Balongan refinery and transform it into a modern petrochemical complex together with CPC.

“Pertamina wishes to leverage CPC’s experiences and technologies developed over the decades on naphtha cracking through the venture,” said Fang.

Having a well-established Taiwanese petrochemical supply chain to form a cluster in the location is also of great interest to Pertamina, he added.

Ignatius Tallulembang, Pertamina megaprojects and petrochemicals director, told the media last Friday that the Balongan refinery will boost capacity from 125,000 barrels per day (bpd) to 150,000 bpd when it completes its first phase of upgrading in 2022.

As for CPC, it will continue to seek growth opportunities not only in Southeast Asia, said Fang.

"We will continue to expand in other countries as long as opportunities show up and are considered proper to us,” he said.

CPC recorded sales of NT$331 billion in the first five months of this year, an 18.9 percent decline from the same period in 2019, according to its filing to the Taiwan Stock Exchange.

Meanwhile, oil and gas giant Pertamina is exploring growth opportunities in pharmaceuticals and expanding its hospital business as Indonesian fossil fuel demand has fallen sharply due to coronavirus lockdowns.

Pertamina told The Jakarta Post that it was in discussion with state-owned pharmaceutical producer PT Kimia Farma to supply certain petrochemicals needed for drug production. The company also plans to acquire more hospitals.