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Honam’s next expansion

Company Strategy, Indonesia, Olefins, Polyolefins, Projects, South Korea
By John Richardson on 09-Feb-2012

By Malini Hariharan

Honam Petrochemical’s plans for Indonesia appear to be progressing.

Company sources told ICIS news yesterday that a feasibility study is underway for a $4-5bn petrochemical complex in Southeast Asia with Indonesia the most likely location. The study is likely to be completed by early 2013.

Meanwhile, Indonesia media quoted senior managing director of business development, Kim Gyo-hyun, as saying that Honam, part of the Lotte Group, has selected a site at Cilegon in Indonesia. The report also said that the complex would include a 1m tonnes/year naphtha cracker and plants for 600,000 tonnes/year of polyethylene (PE), 600,000 tonnes/year of polypropylene (PP), 700,000 tonnes/year of monoethylene glycol and 140,000 tonnes/year of butadiene. He expected the project to be completed by 2016.

But company sources that ICIS spoke with declined to confirm project details.

Feasibility studies for the project are ongoing and the company has not decided on the configurations of the new complex, which will likely include a cracker and other downstream units, the Honam official said.

“The specifications for the new complex will highly depend on EPC [engineering, procurement and construction] contract costs as well as governmental tax benefits,” the official added.

A project in Indonesia makes sense given the country’s growing deficit for petrochemicals, especially polymers. But government support, which has been missing in the past for petchems, is important.