Market spotlight: Wood helps alleviate Indonesia’s dependence on petrochemical imports
Changing demographics are reshaping the petrochemical market’s supply and demand. The need for petrochemical products is consistently proportionate to population and, with a population of more than 270 million in 2020 making it the fourth largest population in the world, Indonesia’s petrochemicals market is rapidly growing.
Petrochemicals turn crude oil and natural gas into an array of everyday products which are all integral to Indonesia’s economy, such as clothing, packaging, plastics, medical equipment, detergents, fertilisers, digital devices and tyres.
Demand for fertiliser in the region is increasing, with a focus to make the agricultural sector one of the key pillars for the country’s welfare. Indonesia is one of the world’s largest producers and exporters of agricultural products, supplying important commodities such as palm oil, natural rubber, cocoa, coffee, rice, and spices.
But the volume of the country’s imports of petrochemical products is very high. Data from the Aromatic and Plastic Associations of Indonesia stated that 55% of petrochemical products in the country are still brought in, sparking the Indonesian government to set robust targets to reduce this.
Advancing Indonesia’s growth strategy
Chandra Asri, Indonesia’s largest integrated petrochemical company, has launched its second world-scale petrochemical complex in Indonesia (CAP2 project) in response to the growing demand for domestic petrochemical products and reducing the dependence on imports.
The CAP2 complex will increase the company's total production capacity from 4.2 million tons to more than 8 million tons per year. This is expected to provide a stimulus for the local downstream petrochemical industry reducing the import burden and supporting job creation as well as the Making Indonesia 4.0 ambition which aims to see Indonesia become one of the 10 biggest economies by 2030.
To support Chandra Asri in achieving its ambitions, Wood has been awarded a contract with the petrochemical giant to deliver Front-End Engineering Design (FEED) on the CAP2 complex. Wood will prepare FEED for HDPE, PP, Jetty and Tank Farm as well as project interface management.
Wood will collaborate with Toyo Engineering Corporation, Samsung Co Ltd and PT Haskoning Indonesia on the remaining FEED packages of the CAP2 complex before commencing EPC Bidding.
Erwin Ciputra, President Director of Chandra Asri, said: “We are excited to announce that our second petrochemical complex project has entered an exciting new chapter with the selection of four leading international contractors to work on FEED. We will work together with our selected contractors to progress the CAP2 project in line with the jointly established target timelines. With the commencement of FEED work, we hope to realise the CAP2 project, building on our performance track record of completing the Integration Master Plan for our existing complex smoothly and safely. This will strengthen our position as a growth partner for all other industrial sectors as well as for the national economy.”
Henry Ling, Vice President of Wood in Thailand, said: “This new contract continues our strong track record of delivering robust engineering design on large complex petrochemical projects, further strengthening our strategic relationship in Indonesia with Chandra Asri.
“Our team of experts will leverage decades of experience to deliver fit-for-purpose solutions. We look forward to partnering with Chandra Asri on this CAP2 project.”
The CAP2 complex includes the Naphtha Cracker, Butadiene, Aromatic Recovery Plant (Benzene, Toluene, and Mixed Xylenes), High Density Polyethylene (HDPE) plant, Low Density Polyethylene (LDPE) plant, which will be the first LDPE plant in Indonesia, and Polypropylene plant (PP).
The contract will be delivered by Wood’s centre of excellence Projects team in Thailand.
