Petrokimia RI Plant Adjusts Operations Due to Middle East Conflict

JAKARTA - PT Lotte Chemical Indonesia (LCI) admitted that it was facing disruptions in the availability of petrochemical raw materials such as naphtha and LPG due to the conflict in the Middle East.

Director of Management Support PT Lotte Chemical Indonesia Cho Jin-Woo said the company is currently also making operational adjustments to maintain production sustainability.

"LCI is still operating until now, but by reducing its production level due to the route of raw material procurement has been changed due to existing logistical obstacles," he said as quoted from a written statement, Thursday, April 9.

With this condition, Cho highlighted and asked for a number of strategic supports from the government to maintain the sustainability of raw material supply.

The support includes simplifying regulations to speed up the import process of raw materials and the application of zero percent import duties for LPG as raw materials.

Then, he said, the company also asked for temporary fiscal assistance to offset the exponential spike in the global supply chain crisis.

"We hope that the government can help ensure energy availability and targeted policy support so that our production activities continue and have a positive impact on the downstream program," he said.

Moreover, he continued, the company also ensures that the distribution of supplies is prioritized to meet the needs of the national downstream industry as part of efforts to maintain stability.

The support will provide a very important security, not only for the current situation, but also for the wider domestic industry in the future.

"In this uncertain situation, our top priority is to maintain the continuity of supply for the domestic industry. LCI continues to optimize all available resources to minimize the impact of disruptions on customers while supporting the stability of the national manufacturing sector," he explained.

Previously, Minister of Industry Agus Gumiwang Kartasasmita stated that the inauguration of the new Lotte Chemical Indonesia (LCI) factory in Cilegon, Banten, is proof that Indonesia is still the main destination for global investment.

The new facility inaugurated by President Prabowo Subianto marked the realization of the long-term investment commitment from Lotte Group and was a strong proof of investor confidence in the industrial climate in Indonesia, especially in the basic chemical sector.

"The construction of this factory shows that Indonesia is still the main destination for global investment in the manufacturing sector, especially the basic chemical industry," said Agus in a written statement, Friday, November 7.

Agus explained that the existence of the new factory is expected to further strengthen the chemical industry sector, especially upstream petrochemicals which are the backbone for various downstream industries, such as pharmaceuticals, food and beverages, electronics to automotive.

The project by the South Korean company has an investment value of around 3.9 billion US dollars.

The plant is capable of processing 3,200 kilotonnes of naphtha per year (kTA), accompanied by an additional 0-50 percent of liquefied petroleum gas or LPG as supporting materials.

From these raw materials, naphtha is processed into upstream products, including; ethylene of 1,000 kTA, propylene of 520 kTA, mixed C4 of 320 kTA, pyrolysis gasoline of 675 kTA, pyrolysis fuel oil of 26 kTA and hydrogen of 45 kTA.

Meanwhile, its downstream products consist of; high density polyethylene (HDPE) as much as 250 kTA, linear low density polyethylene (LLDPE) as much as 200 kTA, polypropylene (PP) as much as 350 kTA, butadiene as much as 140 kTA, raffinate as much as 180 kTA as well as benzene, toluene and xylene (BTX) with a total capacity of 400 kTA.