Pupuk Kaltim to set up ammonia plant in Central Sulawesi

The East Kalimantan-based stated owned fertilizer producer PT Pupuk Kaltim will build an ammonia plant in Luwuk, Central Sulawesi, with an initial investment of about US$250 million, Bisnis Indonesia reported on Wednesday.

The new ammonia plant which would be named Pupuk Kaltim V would get gas supply from Medco's gas field in Luwuk, which is estimated to have gas reserves of about 1.7 trillion standard cubic feet.

The two companies have recently signed a cooperation agreement on the supply of gas from the Luwuk gas field. But the agreement on the price of gas to be supplied from the gas field has not been made. Medco has asked for a price of US$2.2 per million metric British thermal unit (MMBTU). Pupuk Kaltim considers the price still too high.

"We are still negotiating and we hope the price will be lower than that level," Robby Subianto, the technical director of PT Pupuk Kaltim was quoted as saying. He added that the ammonia plant would be built in cooperation with a Korean company which will have a majority stake. PT Pupuk Kaltim will only have a 19.9 percent share in the ammonia plant, he added.

Besides as the majority shareholder, the Korean company will also act as the buyer of the ammonia to be produced from the new factory, he said. But he did not name the company. (*)