LG to build petrochemical plant in Papua, awaits gas supply

South Korea?s LG International will allocate up to US$1.3 billion to build and operate a petrochemical complex in the Bintuni industrial area in West Papua, reports said Saturday

Speaking to reporters following a meeting with Industry Minister MS Hidayat in Jakarta on Friday, LG Senior Executive Jee Hoon-Kang said the petrochemical plant would have the capacity to produce one billion tons of methanol per year.

He said, however, that LG would only start the project after the government provides guarantee on the necessary gas supply.

?This is going to be a very good opportunity for us if we get gas allocation. With it, we can start to develop the [Bintuni] project with the Industry Ministry,? Kang said as quoted by The Jakarta Post.

Before the three-year construction of the facility commences, Kang said that the company would require at least one year for ?deeper study?, to decide on the appropriate licensing and to locate natural gas supply.

Responding to questions regarding Bintuni?s projected time frame, ministry Director for Manufacturing Industry, Harjanto said that it depended on the availability of gas. ?Genting Oil?s Kasowari well [in Papua] could be one of the sources for this industry. So once the natural gas is available, then the project will start? he added.

To support its operations, Harjanto said that LG would need 91 million standard cubic feet per day (MMSCFD) of natural gas, which would bring the total gas consumption of Bintuni up to approximately 202 MMSCFD. There are about 48 trillion cubic feet of gas reserves that have already been identified in the area.

He also said that the ministry would soon be signing a memorandum of understanding (MoU) with LG that would clarify the terms of their partnership, including those related to gas allocation.

The integrated petrochemical complex in Bintuni would produce urea and ammonia-based fertilizers and a wide array of petrochemical products, including methanol, polypropylene and polyethylene.

Bintuni is located near the Tangguh liquefied natural gas (LNG) field in West Papua, which is one of the biggest contributors in Indonesia?s overseas gas contracts. (*)