Oil, chemical industry integration needed

Business players are calling for the integration of existing and future oil refineries with the petrochemical industry to meet rising domestic demand for raw materials from plastics and textile industries.

Deputy chairman of the Indonesian Olefin, Aromatics and Plastics lndustry Association (INAPlas), Suhat Miyarso, said Indonesia currently imported half of all its ethylene demand, which currently averages around 1.6 million tons each year. At present, local production annually stands around 800,000 tons.

“Chandra Asri Petrochemical currently produces around 860,000 tons, which is around 50 percent of our needs. The rest is imported from Korea, Japan, Singapore and Malaysia,” Suhat said Tuesday, referring to the publicly listed petrochemical giant. 

lNAPlas estimates that petrochemical demand Will rise to more than 2 million tons per year in 2021. The surging demand will be driven primarily by industrial sectors such as plastics and textiles, Suhat said.

National demand for plastics products now reaches 5.2 million tons each year, While annual domestic output currently settles at around 2.4 million tons. Apart from fulfilling the country’s demand, business players believe integrating oil refineries with the petrochemical industry can create added value to derivative materials.

Under current crude oil prices, Suhat estimates that refined fuels made from‘~'crud‘e~‘ oil arelat' present Worth only around US$480 per ton. 

“For example, if crude oil is currently around $500 [per ton], the ethylene produced from it can average $900 to $1,100. When it is further processed to polypropylene, it can be sold at $1,400,” he said.

“Compared to refined fuels, the crude oil can increase its original value threefold if it is turned into polypropylene.”

Meanwhile, state-owned oil and gas giant Pertamina is considering expanding petrochemical facilities at its existing and future refineries. Pertarnina senior Vice president for petrochemical projects Dhani Prasetyawan said the firm would focus on the production of polypropylene and polyethylene in the petrochemical sector as the two products seemed to be the most promising.

Polypropylene is widely used in packaging for consumer products and plastic ‘parts for numerousindustries like automotives and textiles. Meanwhile, polyethylene is primarily deployed to make plastic bags, containers and bottles.

“Now Pertamina only has a small number of petrochemical products because We previously designed them as by-products only. For instance, We only produce around 45,000 tons of poly-propylene at the Plaju refinery every year,” he said. “Based on petrochemical supply and demand, Pertamina is now considering developing the business and building olefine crackers to produce polyethylene and polypropylene.” 

Dhani further added that Pertamina planned to design and produce petrochemical products at its future Tuban refinery in East Java. Separately, the government is discussing a plan to distribute piped gas from the upcoming Masela block in the Arafura Sea in Maluku to nearby petrochemical and fertilizer firms.

Industry Ministry’s upstream chemical industry director Muhammad Khayam said the government was reconsidering the piped gas capacity of 474 million standard cubic feet per day (mmscfd) as Pertamina had shown an interest in obtaining around 200 mmscfd.

Jakarta Post, Page-13, Thursday, March, 9, 2017