12 February 1998 17:51 [Source: ICIS news]
LONDON (CNI)--BP Chemicals' joint venture project in Indonesia, including an ethylene cracker and solvents plant in West Java, are "on hold" because of the country's economic crisis, chief executive Bryan Sanderson said Thursday.
PT Peni, the Indonesian polyethylene company in which BP has a 35% stake, was due to begin building the $1bn worldscale cracker early this year. It was planned to be integrated with PT Peni's polyethylene plant.
But Sanderson declined to say Thursday whether it would go ahead. BP director Mike Buzzacott added: "We have a project, and partners, land and a licence (but) whether we would at the moment go out into the financial markets and raise money to build it - it's going to be a little while I think."
Buzzacott said PT Peni had been operating at below 50% utilisation in January. But fixed costs had been extremely low, some 20% of levels a year ago, he said.
Sanderson said there was a lack of political leadership in Indonesia and enormous potential for further (social) trouble when the impact of the crisis got into the "real economy". The country would have to get through its pre-election period before the future of the project could be decided.
Elsewhere in Asia, Sanderson said BP's South Korean joint venture with Samsung had "held up well". The company's planned acetic acid plant in Malaysia had received board approval last week, he said. In China, the Sichuan acetic acid plant would open in the middle of the year, and BP's plans for a petrochemical complex at Jinshan, in partnership with Shanghai Petrochemical, were on course, he said.
"We still think that (Asia) is the place to go for growth," he said. "We are continuing to make major investments there." Sanderson also pointed to opportunities for investment by acquisition in Asia. "Most of the petrochemical industry in some countries is on offer, so like everybody else we are looking at it."
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