Chandra Asri secures up to $1.7bn for 2nd Indonesia petrochemical complex

SINGAPORE (ICIS)–Chandra Asri Petrochemical (CAP) has secured up to $1.7bn in funding for its second petrochemical complex (CAP 2) in Cilegon, Indonesia, with the entry of refiner Thai Oil Public Co Ltd (Thaioil) as a new strategic investor.

Via a planned pre-emptive rights issue, Thaioil – a subsidiary of Thailand state-owned oil and gas company PTT – will get a 15% stake in the Indonesian firm, CAP said on Friday.

Thailand’s conglomerate Siam Cement Group (SCG) will retain its existing stake in CAP after the capital increase, which is expected to be completed “no later than 30 September 2021”.

The total estimated investment from Thaioil obtaining a 15% stake and SCG Chemicals retaining about 30.57% of CAP, is up to $1.3bn, the Indonesian producer said.

“CAP’s major shareholders, Barito Pacific and SCG Chemicals fully support this corporate action to inject equity into CAP,” it said.

The transaction is still subject to regulatory approvals.

“Subject to a successful final investment decision (FID) on CAP 2 targeted for 2022, Thaioil and SCG Chemicals may further collectively invest up to $400m,” Chandra Asri said.

CAP’s second petrochemical complex is expected to cost around $5bn and take four to five years to build.

The new complex will double CAP’s production capacity to more than 8m tonnes/year.

Thaioil, as a strategic investor in the project, will be able to supply CAP with naphtha from its $4.8bn clean fuel project (CFP) which is scheduled to be completed in 2023, company CEO Wirat Uanarumit said.

The CFP project at Thaioil’s refinery in Sriracha, Thailand has a vacuum gas oil hydrocracker, a residue hydrocracker, a hydrogen manufacturing unit, a naphtha hydrotreater, a diesel hydrodesulfurization unit, a sulfur recovery unit, and an electric power plant fueled by residue pitch.

CAP is the sole operator of a naphtha cracker in Indonesia.

Its planned second petrochemical complex is expected to produce 1.1m tonnes/year of ethylene; 600,000 tonnes/year of propylene; 175,000 tonnes/year of butadiene; 363,000 tonnes/year of benzene; 450,000 tonnes/year of high density polyethylene (HDPE); 300,000 tonnes/year of low density polyethylene (LDPE); and 450,000 tonnes of polypropylene (PP).

“This will help fulfill Indonesia’s growing domestic demand, reduce import dependency, develop the country’s local downstream petrochemical industry,” CAP said.

Its existing complex in Cilegon, Indonesia, produces 900,000 tonnes/year of ethylene and 490,000 tonnes/year of propylene, according to the ICIS Supply & Demand Database.

Thumbnail photo: Chandra Asri’s olefins plant in Cilegon, Banten province (Source: Chandra Asri official website)