Current and Future Outlook of Petrochemical Industry and EPA/FTA in the Chemical Industry

Ministry of Industry Republic of Indonesia Manila, 8 July 2007

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The topics are : The current state of the petrochemical industry, commenting on the position of industrial structure relation with : - refineries - procurement of source materials - production capacity - comparative advantage and disadvantage - problems As well as future outlook 2010 such as changes in competitiveness and production capacity, long term issues, etc. The positions on EPA/FTA policies in the chemical industry.
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1. The current state of the petrochemical industry, commenting on the position of industrial structure
Petrochemical

Product is strategic, because it is used to be raw material of downstream industry such as textile, plastic, synthetic rubber, cosmetics, pesticides, cleaning agent, coloring agent, pharmaceutical substances, explosive agent, fuel, synthetic leather, etc) Nowadays, Indonesia developing olefin centre (ethylene, propylene, etc) aromatic centre (benzene, toluene, xylene, etc) and methane based (ammonia, methanol, etc). Petrochemical product usage per capita in Indonesia is lower than other ASEAN countries
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Principal Location Petrochemical Industry in Indonesia

SOUTH KALIMANTAN 1. Austral Byna, PT. 2. Binajaya Rodakarya, PT. 3. Intan Wijaya Internasional, PT. 4. Gelora Citra Kimia Abadi, PT. 5. Giat Ultra Chemical, PT.

ACEH 1. Asean Aceh Fertilizer, PT 2. Dyno Mugi Indonesia, PT 3. Pupuk Iskanda Muda, PT

WEST KALIMANTAN 1. Benua Multi Lestari, PT. 2. Duta Pertiwi Nusantara, PT. 3. Duta Rendra, PT. 4. Kurnia Kapus Utama GI, PT.

Philippines
EAST KALIMANTAN 1. Batu Penggal Chemical, PT. 2. Balik Papan Forest, PT. 3. Cakram Utama Jaya, PT. 4. DSM Kaltim Melamine, PT. 5. Fintra Hamka Mandiri, PT. 6. Inne Donghwa, PT. 7. Kaltim Hexamindo, PT. 8. Kaltim Hexamindo W., PT. 9. Kaltim Methanol Industry, PT. 10. Kaltim Pacific Amoniak, PT. 11. Kaltim Parna Industri, PT. 12. Lakosta Indah, PT. 13. Pertamina, PN 14. Prima Adhenas, PT. 15. Pupuk Kalimantan Timur, PT.

Malaysia
NORTH SUMATRA 1. Belawan Deli Chemical PT. 2. RGM Glue, PT 3. Superin, PT JAMBI 1. Putra Sumber Kimindo, PT. 2. Sabak Indah, PT. SOUTH SUMATRA. 1. Pertamina, PN. 2. Pupuk Sriwidjaya, PT. 3. Sri Melamine, PT. 4. Sulsel Prima Pratama, PT. 5. Uforin Prajen, PT. BANTEN 1. Amoco Mitsui PTA Indonesia, PT. 2. Asahimas Subentra Chemicalk, PT. 3. Buana Sulvindo, PT. 4. Cabot Indonesia, PT. 5. Chandra Asri, PT. 6. Dong Jin Indonesia, PT. 7. Dow Polymers Indonesia, PT. 8. Dover Chemical, PT. 9. Eternal Buana Chemical, PT. 10. GT. Petrochem Ind.ustries Tbk., PT. 11. Indonesia Kasai Prakarsa, PT. 12. Indopolymers Adipura, PT. 13. Karbon Indonesia, PT. 14. Lyondell Indonesia, PT. 15. Mitsubishi Chemical Indonesia, PT. 16. Mulya Adhi Paramita, PT. 17. Nippon Shokubai Indonesia, PT. 18. Pardic Chemical, PT. 19. PENI, PT. 20. Petnesia Resindo, PT. 21. PIPI, PT. RIAU 1. Korindo Abadi, PT. 2. Perawang Perkasa, PT.

CENTRAL KALIMANTAN 1. Korindo Ariabima Sari, PT

MALUKU 1. Nusa Prima Pratama Industry, PT. 2. Wira Nusa Trisatrya, PT.

PAPUA 1. Kayu Lapis Indonesia, PT. 2. Kodeco Memberamo, PT.

LAMPUNG 1. Intan Prima Tani, PT JAKARTA. 1. Eastern Polymer, PT. 2. Findeco Jaya, PT. 3. Justus Sakti, PT. 4. Pulosynthetic, PT. 5. Sayap M Utama, PT.

CENTRAL JAVA 1. Indo Acidatama Chem. Ind., PT. 2. Kayu Lapis Indonesia, PT. 3. Pertamina

21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37.

Polypet Karya Persada, PT.. Polychem Lindo Inc., PT. Polyprima Karyareksa, PT. Rhone Poulenc Indolatex, PT. Risjad Brasali Styrene, PT. Sari Dahin Plasindo, PT. Satomo Indovyl Monomer, PT.. Satomo Inovyl Polymers, PT. Sentra Sintetikajaya, PT. Showa Esterindo Indonesia, PT. Standard Toyo Polimer, PT. Styrindo Mono Indonesia, PT. Sulfindo Adi Usaha, PT. Sunkyoang Keris Adiputra, PT. Timur Raya Tunggal, PT. Tri Polyta Indonesia, PT. Unggul Indah Corp., PT.

WEST JAVA 1. Arindo Pacific Chemical, PT. 2. Aristek High Polymer, PT. 3. B ASF Indonesia, PT. 4. Branta Mulia, PT. 5. Dayin Prima Paint, PT. 6. Exor, PT. 7. Henkel Indonesia, PT. 8. Henoch Jaya Chem. Industri, PT. 9. Herbert Indonesia, PT. 10. Indorama Synthetics Interindo, PT. 11. Peroxide Indonesia Pratama, PT. 12. Polysindo Eka Perkasa, PT. 13. Polytama Propindo, PT.

14. 15. 16. 17. 18. 19. 20.

Pupuk Kujang, PT. Risyad Brasali Peroksida, PT. Sintas Kurama Perdana, PT. Tunas Sumber Idea Kreasi, PT. Unilever Indonesia, PT. Union Carbide, PT. Warna Agung, PT.

EAST JAVA 1. Aktif Indonesia Indah, PT. 2. Akzo Nobel Raung Resin, PT. 3. Albright & Wislon manyar, PT. 4. Arjuna Utama Kimia, PT. 5. Eterindo Nusa Graha, PT. 6. Golden Bridge Chemicals, PT. 7. Maspion Styrene, PT. 8. Mitsui Eterindo Chemical, PT. 9. Pamolite Adhesive, PT. 10. Petro Oxo Nusantara, PT. 11. Petrokimia Gresik, PT. 12. Petrokimia, PT. 13. Petrowidada, PT. 14. Samator Inti Peroxide, PT. 15. Siam Maspion Polymer, PT. 16. Sindopex Perotama, PT.

Australia

Source of Raw Material for Petrochemical Industry

72,98

1. Total = 9.826 MMSTB (2002) 2. R / P = 17 Year

ACEH
221,6

: Petroleum Stock (MMSTB)

Sumatera Utara

Malaysia

1.236,74

Kalimantan Timur Sumatera Tengah 5.705,08 Sumatera Selatan

748,45 323,88

100,96

Irian Jaya

Sulawesi Selatan Jawa Timur

Jawa Barat
1.109,35

Jawa Tengah

Australia

Figure 2 : Petroleum Stock

Figure 3 : Stock and Infrastructure of National Natural Gas

THAILAND LAOS

Manila

Bangkok
CAMBODIA
Ban Mabtapud

Philipines
VIETNAM

Phnom Penh

South China Sea

Existing Pipeline Planned Pipeline 96.030 STOCK P1 (BSCF)

Ho Chi Minh City

Khanon Songkhla Erawan

660 1.544
Banda Aceh Lhokseumawe

Bangkot Lawit

Jerneh Guntong Kota Kinibalu

Penang WEST Kerteh Duyong Mogpu MALAYSI A Medan

512

West Natuna
Singapore Gas Trunkline

Alpha Natuna

BRUNEI

38.131

STOCK P2 (BSCF)

19.646 31.955
Kuchin g

Bandara Seri Begawan

EAST MALAYSIA
Bintul u

1.017

Kuala Port Klang Lumpur

Port Dickson Dumai Duri

3.119 25.129
Bontang LNG Plant & Export Terminal

Manado Ternate

3.977
HALMAHERA

Pacific Ocean

SINGAPORE
Batam Bintan

14.531
Sorong Jayapur a

2.995
Padang

KALIMANTAN Samarinda
Balikpapan

7.485

Attaka Tunu Bekapai

Source : Ministry of Energy and Mineral Resource

S U M A

1.765 2.640
SULAWESI

1.204 3.755
Ardjuna Fields Semarang Cirebon Ujung Pandang

T R A
Jambi Grissik Palembang

Banjarmasin

BURU

SERAM

PAPUA

Jakarta

MADURA
Bangkalan

1.088 4.731

177 446

J A V A Surabaya

I Pagerungan N D O N E S I A
SUMBAWA FLORES
TIMOR

2.400 2.260 Maluku Selatan

Merauke

BALI
LOMBOK

588

Indian Ocean 2.794

SUMBA
AUSTRALIA

1.

Demand Of Plastic Monomers & Polymers Indonesia 1995 2015 (Actual & Forecast) In 000 MT
Products 1995 449 280 85 238 463 494 59 265 1996 676 514 106 297 578 561 75 311 1997 707 466 104 409 563 611 81 319 2003 1197 750 220 348 783 720 128 375 2004 1314 818 242 376 861 792 141 413 2005 1432 892 265 406 947 871 155 454 2006 1561 972 302 438 1023 958 170 499 2011 * 2147 1337 443 572 1421 1378 246 745 2015 * 2609 1625 581 722 1795 1703 305 1024

1 2 3 4 5 6 7 8

Ethylene Propylene Styrene Monomer Vinyl Chloride Monomer Polyethylene Polypropylene Polystyrene Poly Vinyl Chloride

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2.

Supply Demand & Balance (FORECAST) of Principal Olefin product

Products 2006 600 585 98 996 20 976 1561 -976 630 598 95 374 0 374 972 -374 2007 600 585 98 1136 20 1116 1701 -1116 830 788 95 271 0 271 1059 -271 2008 1200 1020 85 855 20 835 1855 -835 1030 978 95 177 0 177 1155 -177 2009 1200 1120 93 878 50 828 1948 -828 1030 1010 98 203 0 203 1213 -203 2010 1700 1615 95 480 50 430 2045 -430 1500 1425 95 0 152 -152 1273 152 2011 1700 1650 97 547 50 497 2147 -497 1500 1470 98 0 133 -133 1337 133 2012 1700 1675 99 630 50 580 2255 -580 1500 1470 98 0 66 -66 1404 66 2013 1700 1675 99 743 50 693 2368 -693 1500 1470 98 4 0 4 1474 -4 2014 1700 1675 99 861 50 811 2486 -811 1500 1470 98 78 0 78 1548 -78 2015 1700 1675 99 985 50 935 2610 -935 1500 1470 98 155 0 155 1625 -155 11 Ethylene Capacity (a) Production (b) Utilization (%) (b/a) Import (c) Export (d)

Trade Balance (c (c-d) Demand (e) Balance (b (b-e) 2 Propylene Capacity (a) Production (b) Utilization (%) (b/a) Import (c) Export (d) Trade Balance (c (c-d) Demand (e) Balance (b (b-e)

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3.
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Supply Demand & Balance (Actual) of Fertilizer

2000 2001 2002 2003 2004 2005 Urea Capacity (a) Production (b) Utilization (%) (b/a) Import (c) Export (d) Trade Balance (c (c-d) Demand (e) Balance (b (b-e) 6.162 5.707 92.62 0 1.491 -1.491 4.009 1.697 6.732 5.174 76.86 0 975 -975 4.218 955 7.302 5.391 73.83 0 754 -754 4.153 1.238 7.302 5.423 74.28 0 939 -939 4.588 835 7.302 5.671 77.67 0 495 -495 5.022 649 7.827 5.884 74.75 0 797 -797 5.201 683

Products (in thousand tonnes) tonnes)

NonNon-Urea (SP(SP-36+ZA+NPK) Capacity (a) Production (b) Utilization (%) (b/a) Import (c) Export (d) Trade Balance (c (c-d) Demand (e) Balance (b (b-e) 1.850 1.041 70.84 345 0 345 1132 -91 1.850 1.221 80.28 325 0 325 1194 27 1.850 1.065 70.41 528 0 528 1670 -605 1.850 1.101 67.48 444 0 444 1364 -263 1.850 1.360 79.87 600 0 600 1614 -254 1.850 1.752 90.41 635 0 635 1791 -39 12

4.
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Supply Demand & Balance (Actual) of Aromatic Product

Products (in thousand tonnes) tonnes) Benzene Capacity (a) Production (b) Utilization (%) (b/a) Import (c) Export (d) Trade Balance (c (c-d) Demand (e) Balance (b (b-e) 123 93 92.62 244 60 184 277 - 184 123 83 76.86 257 58 199 281 -202 123 80 73.83 297 62 235 315 -235 123 88 74.28 306 67 239 327
-239

2001

2002

2003

2004

2005

2006

123 88 77.67 315 72 243 338

-250

123 88 74.75 324 78 246 349 - 261

Toluene Capacity (a) Production (b) Utilization (%) (b/a) Import (c) Export (d) Trade Balance (c (c-d) Demand (e) Balance (b (b-e) 0 0 0 78 0 78 78
-78

0 0 0 80 0 80 80
-80 -

0 0 0 86 0 86 86 86

0 0 0 94 0.1 93.9 94 - 94

0 0 0 99 0 99 99 - 99

0 0 0 104 0 104 104 - 104

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4.

Supply Demand & Balance (Actual) of Aromatic Product (continued)

2001 2002 2003 2004 2005 2006

Products (in thousand tonnes) tonnes) 3 Xylene Capacity (a) Production (b) Utilization (%) (b/a) Import (c) Export (d) Trade Balance (c (c-d) Demand (e) Balance (b (b-e)

270 231 85.56 921 89 732 1.139

-

270 220 81.48 976 91 885 1.213 - 993

270 245 90,74 1.004 94 910 1.228

-983

270 255 94.4 1.051 110 941 1.235 - 980

270 265 95.8 1100 128 972 1.329 - 964

270 276 102 1151 150 1401 1.396 - 1120

908

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Problems in Petrochemical Industry

Capacity utilization of petrochemical industry is still below the installed capacity. Petrochemical industry is not fully integrated with primary industry (Oil and gas as raw material supplier). Downstream-intermediate-upstream petrochemical industry is not integrated. In future, petrochemical industry must be developed using cluster approach. The relation between Stakeholder and industrial agent must be harmonized. It need to create cooperation between them to get singular like-minded. Relation between stakeholder and regional government must harmonize based on the prevailing of Regional Autonomy Act in Indonesia. Research and Development (R&D) in petrochemical sector must be increased in science and application development.
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Strategy

Utilization Improvement : Wider foreign and domestic market domination and dissemination of market information Increasing in usage and efficiency of domestic fuel. Integration between Oil and gas with petrochemical industry to create work-climate competitiveness. Empower the Industrial Structure in every level of value chain : Increasing added value by rise the local component composition (raw material, capital goods,, Human Resources, technology, construction and maintenance services, and local capital Creating conducive investment-climate by giving fiscal monetary, and administration incentives including law enforcement and security stability. Development of environmental-friendly and sustainability industry and Human Resources ability.
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Strategy (continued)

Future Technology Development :

Increasing the transfer of technology by using expired license technology in petrochemical industry and it developed appropriate with local potential Applying licenses of process technology and it cooperate together with license owner

Develop the Cluster of Petrochemical Industry in certain location

: Bontang, East Kalimantan Province C1 based Product Aromatic based Product : Tuban-Gresik, East Java Province Olefin based product : Anyer-Merak-Cilegon, Banten Province

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Policies

Arrangement allocation of local resources as petrochemical industry raw material Arrangement of waste/scrap/used product petrochemical as raw material Arrangement of raw material and energy efficiency by diversification and saving. Arrangement of alternative-energy development such as coal and biomass gasification.

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Policies (continued)

Arrangement of human resources development by increasing national work-competence standard Arrangement government. of infrastructure development related in

petrochemical industry by private sector, central and regional

Arrangement the policies to encourage local production usage. Arrangement of tax incentives to encourage investment in petrochemical industry Arrangement of incentive to create integrated and highquality R&D development.
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2.

The positions on EPA/FTA policies in the chemical industry.

Indonesia undertook international cooperation, both bilaterally and multilaterally and through a number of regional and international cooperation forums within a framework of support for national industrial development and market access. Indonesia as one of ASEAN members join in ASEAN FTA cooperation : ASEAN Korea Free Trade Area, 100% tariff commodities will be eliminated in the year 2012. ASEAN-China Free Trade Agreement, sensitive list will be 0% in 2012 and highly sensitive in 2020. ASEAN-Australia/New Zealand FTA, 100% commodities tariff will be eliminated in the year 2015. In bilateral cooperation : Indonesia-Japan Economic Partnership Agreement (IJ-EPA).
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THANK YOU

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