JAKARTA, 10th December 2013 - PT Pertamina (Persero) and PTT Global Chemical Public Company Limited (PTTGC) announced December 10th in Jakarta, Indonesia, the signing of the Manufacturing Joint Venture - Heads of Agreement (Manufacturing JV - HOA) to pursuing the final investment decision of the world-scale Petrochemical Complex in Indonesia targeting for commercial operation by 2018.
Pertamina, the Indonesian national energy company, and PTTGC, the Thai leading Petrochemical producer, have advanced its partnership and collaboration by entering into the Manufacturing JV - HOA to proceed further with the feasibility study of the world-scale petrochemical complex. This collaboration advancement comes after the completion of the extensive project preliminary feasibility study - a part of the partnership HOA signed earlier since April 2013.
This Manufacturing JV - HOA is aimed to further materialize the agreed joint venture principles and investment scope, as well as enable both parties to finalize the project details by early 2014 prior to conducting the detail bankable feasibility study and Front End Engineering Design (FEED).
Pertamina and PTTGC have reached the project definition understanding , including a common goal and objective, a competitive investment model and appropriate site specification, as well as each party's strength to be leveraged for building JV's competitiveness. This will move forward for final investment decision, anticipated in 2015.
In addition the exhaustive Indonesia polymer market survey has been jointly conducted through the distribution and marketing activities of both parties, where the initial complex configuration has been defined and technical study of such investment scope has been assessed, assuring the parties aspiration in being part of Indonesian a better living and self-sufficient society.
Meanwhile, domestic demand for petrochemical products is expected to increase, due to the positive trend of manufacturing sector. Indonesian petrochemical market value is expected to reach US$ 30 billion in 2018 and this Manufacturing JV is targeting to control 30% of market share after the Petrochemical Complex commercially operate in 2018. Currently, the production of petrochemical in Indonesia is still insufficient to meet the downstream industry needs, creating large import to the amount of US$ 5 billion per year.
Karen Agustiawan, President Director and CEO of Pertamina, stated, "Today's announcement is a crucial proof of Pertamina's commitment to this high priority collaboration and investment. The project will represent a key milestone of Pertamina's ambitious downstream petrochemical development strategy; therefore Pertamina is bringing the best potential investment conditions for further project feasibility study refinement; including the complex location providing best economics competitiveness through refinery integration, feedstock security and supportive fundamental infrastructure".
"We are pleased to have PTTGC as our partner, as they bring a comprehensive industry experiences from their record of success in the chemicals business. PTTGC's intensive expertise and our culture similarities are perfectly the essences of our long term business partnership in building Indonesia petrochemical flagship." said Karen Agustiawan.
Bowon Vongsinudom, President and CEO of PTTGC, said, "Since the initial HOA signing on 1st April, 2013, in Bangkok, we have been working together very hard on the preliminary study of the project. The complex will include a world-scale cracker and integrated downstream units, which - in the next stage - we shall focus on a further detailed assessment of greater value enhancement through various synergies and integration at the selected location to assure the complex economics and competitiveness."
"For PTTGC, this partnership is the right strategic ownership model with the right partner, designed to capture growth in the largest economy center among AEC countries. PTTGC is bringing the industry knowledge, while Pertamina is providing a superior local access, together this collaboration will deliver a promising achievement of this potential investment." According to Mr.Bowon.
Pertamina and PTTGC have targeted the project feasibility study refinement stage for conclusion by the 2nd quarter of 2014, to accelerate the implementation and meet the complex start up by 2018. Together with the building block of the potential joint petrochemical complex investment, PTTGC and Pertamina will also enter into a marketing and trading joint venture to initially conduct both PTTGC's and Pertamina's polymer products marketing and distribution throughout Indonesia in the near future.
Pertamina owns and operates 5 refineries throughout Indonesia. With the total capacity of around 1 million Barrel Crude Oil Per Day, it is ranked the 5th largest in Asia. In this regard, it has tremendous potential to integrate refinery and petrochemical business hence adds more values to the natural resources of Indonesia. With these advantages, Pertamina is determined to be a major player in Indonesia as well as in the region.
PTT Global Chemical, as Chemical Flagship of the PTT Group, with the combined chemical / petrochemical capacity of 8.72 million tons per year and crude oil / condensate distillation capacity of 280,000 barrels per day. The Company has been expanding its business into the specialties and green chemicals through a number of oversea strategic acquisitions. Such investments also clearly represent PTT Global Chemical's growth aspiration to expand its business internationally.