As part of the state visit by Susilo Bambang Yudhoyono, the President of the Republic of Indonesia, a meeting took place in Berlin today between Dr. Klaus Lesker, Managing Director of Ferrostaal GmbH, and the President. Prior to this meeting, Ferrostaal signed a Letter of Intent with the Ministry of Industry of the Republic of Indonesia on cooperation for the development of a downstream petrochemical investment project in the West Papua region of Indonesia.

Ferrostaal as project developer

A petrochemical plant complex for the production of methanol, propylene and polypropylene from natural gas is due to go into production in the Teluk Bintuni Regency in 2019. Ferrostaal’s role in the project is leading the project development and being an investor, in addition to which it will be responsible for structuring the investments planned by the foreign and local Indonesian investment partners. According to the Letter of Intent, the allocation of the principal gas supply from local reserves as well as the allocation of building land within an industrial park planned by the Ministry of Industry of the Republic of Indonesia in Teluk Bintuni will follow within the next months.

 Significant economic benefits for the Indonesian market

“The project promises significant economic benefits for the Indonesian market thanks to the high level of value added in the country. Firstly, use of the end products for its own market will enable Indonesia to save up to 600 million US dollars annually on imports. Furthermore, the high technical standards of the plant complex will ensure a technology transfer and safeguard long-term jobs for up to 3,000 direct and indirect employees. This is about four times the number that would be created by, for example, the production of liquefied natural gas (LNG),” says Klaus Lesker, Managing Director of Ferrostaal GmbH.

Supply of local plastics and fuel markets

After completion of the plant, annual output is expected to be in the region of 400,000 tonnes of polypropylene. The plastic as well as the by-products petrol (approx.. 150,000 tonnes) and liquefied natural gas (approx. 34,000 tonnes) are to be sold on the local market in order to meet the growing local demand and support growth in the country through this import substitution. Polypropylene is the second most important plastic in the world after polyethylene. In Indonesia, the material is to be used primarily in the plastics industry for the manufacture of containers for example, but also increasingly in the automotive and furniture industries.

Sustainable industrialisation in Indonesia

The project supports the implementation of a master plan adopted by the Republic of Indonesia (MP3EI), which provides for sustainable industrialisation in the period to 2030 in order to accelerate economic  development, particularly in the east of Indonesia. Indonesia will particularly benefit from the alternative polypropylene production technology. Production will be based exclusively on local natural gas from reserves in West Papua, which have the potential to keep the plant complex supplied for at least 25 years.

About Ferrostaal GmbH

Ferrostaal is a leading service provider with respect to the development and realization of industrial plants worldwide. As a vendor-and technology-independent system integrator, the company offers development and management of projects and financial planning in the segments of Petrochemicals, Power, Renewables, Oil & Gas and Special Projects. In addition Ferrostaal offers financing solutions inter alia structured export financing. As a supplier-independent full service provider, Ferrostaal assembles complex modules for automotive manufacturers and suppliers, and trades as an independent sales and service partner with piping equipment and machines and installations in printing, plastics, packaging and recycling. Ferrostaal employs around 4,300 people in more than 40 countries.

About Ferrostaal Indonesia

The company has now had trading operations in Indonesia for more than 50 years, and has conducted project business and plant construction here for over 30 years. Today, the Ferrostaal Group has two companies in Indonesia – PT Ferrostaal Indonesia and PT Ferrostaal Equipment Solutions – which are based in the capital Jakarta and employ around 100 staff. The project activities cover various branches of industry, including Power, Oil & Gas, Mining & Metal, and Petrochemicals. In the Equipment business, Ferrostaal Indonesia offers a range of services related to all aspects of the machinery business.