Pertamina to supply 20,000 bpd of LSWR for Tuban plant

State oil and gas Pertamina will supply between 15,000 and 20,000 barrels per day of low sulfur waxy residue (LSWR) for a US$2.3 billion petrochemical plant in Tuban, East Java the company will operate together with a number of foreign investors, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Wednesday.

That plan was made in a meeting between Purnomo, representatives of Pertamina, the government?s financial sector policy committee (KKSK) and Japanese investors in Jakarta on Wednesday.

Purnomo did not mention the names of the Japanese investors represented in their meeting. Sources said earlier Mitsubishi of Japan and BP of Britain were among the foreign investors which had expressed their interest to acquire a stake in the Tuban plant.

The 15,000-20,000 bpd of LSWS for the plant would be supplied by Pertamina?s refineries in Balongan (West Java) and Duri (South Sumatra), Purnomo said.

?The supplying of the LSWS is based on the request from Japanese investors who prefer that commodity to propylene because of price factors and because of the high demand for propylene,? the minister said.

Purnomo said the meeting participants also agreed that the plant could also use propylene if Pertamina could not supply enough LSWR to it.

PT Trans Pacific Petrochemical Indotama (TPPI) will operate the Tuban plant, which was initially controlled by the Tirtamas Group. The Indonesian government took over the financially troubled Tirtamas and later asked Japanese investors to join it running the plant. But some of them insisted that Pertamina have a stake in it otherwise they would not take part in the project.

They had also agreed that TPPI would start completing the project in early 2002, Purnomo said, but he did not mention the amounts of funds required by the plant.

Meanwhile, Bisnis Indonesia daily reported Tuesday a number of multinational companies which would be involved in the petrochemical plant will issue commercial papers worth $400 million in the international market to finance the Tuban project.

?The involvement of the multinational companies will be key to get high rating for the commercial papers, and they will raise funds from the international market after getting feedstock supply guarantee from Pertamina,? the daily quoted a source as saying.

Initially, the project was controlled by Tirtamas (70 percent), Siam Cement of Thailand (20 percent), while the remaining 10 percent went to Japanese giants Nissho Iwai Corp. and Itochu Corp.

According to the source, Pertamina will get 15 percent stake in the petrochemical project, and will also supply fuels for it. (godang)