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OPTIMALIZATION OF PETROCHEMICAL FEEDSTOCKS IN INDONESIA

BY : MR. SURYA ARMANSYAH CORPORATE PLANNING DIVISION, PERTAMINA , INDONESIA

6 th ASIA/CHINA PETROCHEMICAL FEEDSTOCK MARKETS CONFERENCE Shenzhen, China, 14 -15 MAY 2007

OUTLINE :
I. INTRODUCTION
1. Oil and Gas Law No. 22/2001 and Government Regulation

No. 36/2004 and its impact on Upstream and Down stream Oil & Gas Business 2. Indonesia Oil and Gas Reserves, 2005

II. INDONESIA PETROCHEMICA LS INDUSTRY OUTLOOK

1. Petrochemical Industry Chain. 2. Strength and Weakness of Indonesia Petrochemicals Industry 3. Main Olefins & Aromatics Producers In Indonesia (Chandra Asri,

PERTAMINA and TPPI) 4. Domestic Petrochemicals Feedstocks Balance (Gas, Naphtha and Condensate) 5. Oil Price Prediction 6. Limitation of Gas, Naphtha and Condensate Supplied for Domestic Petchem Feedstocks Demand

PT PERTAMINA (PERSERO)

III. NATIONAL OPTIMALIZATION FOR PETCHEM FEEDSTOCKS

1. Optimize Petchem Feedstock for Domestic

Industries (Natural Gas, Condensate and Naphtha), 2. Feedstock Price Policy (Gas Price)

1.

IV. PERTAMINAS PETCHEM FEEDSTOCK STRATEGY FOR OPTIMALIZATION

2. 3. 4.

Utilizing Offgas ex RCC for Propylene production Utilizing Natural Gas for producing Petrochemicals/Oil products or LNG Utilizing Sr. Kerosene for N-Paraffin production Optimizing Gas Production from new field for Fertilizer Plants Feed or Public Gas Services

CONCLUSION

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I.1. INTRODUCTION
NEW REGULATION FOR OIL & GAS SECTOR IN INDONESIA (Implementation of Oil & Gas Law No. 22/2001 and Government Regulations No. 35 & 36/2004)

BEFORE
PERTAMINA Regulate and Supervise Upstream & Down Stream Business
PERTAMINA as a Single Operator/ Monopoly in Downstream Business and as a Coordinator for all upstream Business in Indonesia (PSC)

AFTER
DIRJEN MIGAS UPSTREAM : BP MIGAS DOWNSTREAM :BPH MIGAS

Regulator

Operator

PERTAMINA merely a Player in Upstream /Downstream Business similar to others

Custodion for Oil & Gas Reserved

PERTAMINA Manage for Oil & Gas Business, as a Representative of the Government)

BP MIGAS BPH MIGAS

BP MIGAS : Regulatory Agency for Upstream Business. BPH Migas : Regulatory Agency for Downstream Business
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I.2.a. Indonesia Oil Reserves, 2005

Riau as main reserves

Indonesia total oil reserves (2005) around 8,6 Billion barrels. Reserves to production ratio = 18 years.
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Source : ESDM 2005

I.2.b. Indonesia Gas Reserves , 2005 (Continued)

Indonesia Gas Reserves around 188 TSCF (2005) which main reserves located in Natuna, East Kalimantan, Irian Jaya and South Sumatera. For Natuna Reserves is not produced yet. Reserves to production ratio = 61 years.
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Source : ESDM, 2005

II.1. Petrochemical industry chain in Indonesia


Oil/gas industry Feedstock Upstream Petrochemical industry Midstream/downstream
(US$.1-0.4 bil/plant) PE PP EDC/VCM PVC

User industry Consumer goods


Plastic processing film, sheet, bags, bottles House ware, toiletries, toys A uto mobile parts, appliances, electronics goods & component Synthetic rubber Synthetic textile, pet bottles Detergent

(US$ 1-2 bil/plant)

1. Naptha 2. Condensate

[A nyer] Ethylene Propylene

EG SM PS/EPS SBR PTA LA B PET

[Cilacap, Tuban] Benzene P-Xylene o-Xylene (US$0.2-0.4 bil/plant) Methanol plant [Bontang, Bunyu]

PA

DOP [A nyer/Merak/Cilegon]

Plasticizer

Solvent, MTBE, Chemicals Formaldehyde Resins, Chemicals Solvent, Chemicals, Explosives Urea Fertilizer, Resins, A dhesives

3. Natural Gas
(Methane,Ethane)

Methanol
Ammonia plant [Bontang, Palembang, et all]

Methanol
Source, Deperin, 2007 PT PERTAMINA (PERSERO) 7

II.2. STRENGTH & WEAKNESS OF PETCHEM INDUSTRY IN . INDONESIA


A. STRENGTH : 1. Rich Gas, Oil and Coal resources that could be utilized as Petrochemicals feedstock. 2. Industries that use petrochemicals products such as textiles are developed. 3. Low Labor cost B. WEAKNESS : 1. Petrochemicals Industry and its feedstock are not so linked, due to some feedstock still imported. 2. Infrastructure support such as Power Generators to be continued developed to support Petrochemicals Industries zone. 3. Some Petrochemicals Industries still stand alone ( not integrated yet between upstream-midstream and downstream Chain)
Source : PTM, 2006
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II.3 MAIN PETROCHEMICALS INDUSTRY PROFILE IN INDONESIA


525

(Unit : 1,000 t/y) (A s of end 2006)

Ethylene
+70 (2007)

LL/HDPE
+20

200

HDPE
Titan *1 GT Petrochem SMI
+15

100

CHANDRA ASRI PETCHEM INDUSRY

LL/HDPE MEG SM

450

216

340

Import

Import Ethylene

Asahimas/Satomo

EDC

360/265

Naphtha/Condensate
1,300

VCM PVC
Try Polyta

400/100

SEI

285/85 70

Olefin Plant Propylene


+40 (2007)

Ethyl Acetate PP
360

Nippon Shokuba i

*2

Acrylic Acid
60

Import Propylene Recycle


200

Acrylic Ester
100

C4 fraction Pyrolysis Gasoline

(Feedstock source f or suspende d C4 derivatives project) (Feedstock source f or suspende d aromatics project)
240

Source : Deperin, 2007

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II.3 MAIN PETROCHEMICALS INDUSTRY PROFILE IN INDONESIA (continued)


(Unit : 1,000 t/y) (A s of end 2006)

.
Light Naphtha
1,800

TPPI PETCHEM INDUSRY


Domestic/Import
Heavy Naphtha

Condensate

4,500

A romatic Plant

Benzene Toluene

230

100

Conde nsate Splitter Bottoms

JGC/UOP

O-Xylene

120

P-Xylene

500

Kerosene/Diesel

300/140

Reformat

282

Source : Deperin, 2007

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II. 3 MAIN PETROCHEMICALS INDUSTRY PROFILE IN INDONESIA (continued)


Refineries Aromatics Plants
Benzene
Naptha PX

TA/PTA Plant PTA

Propylene PP Plant Ex. FCCU PP Product PX PTA PP Propylene Benzene Capacity (T/Year) 270.000 225.000 45.000 180.000 100.000

Offgas ex. RCC

Propylene Recovery Unit

Propylene

PERTAMINAS PETROCHEM INDUSTRIES


Source : PTM, 2007

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II.4. Domestic Petchem Feedstocks Balance Case : Gas Balance, in 2005


PERTAMINA
1.03 BSCFD
Main Gas consumption as feed of LNG Plants In 2008, Total Gas Production will be around 9,15 BSCFD which PERTAMINA Production is expected = 1,65 BSCFD.
CONSUMPTION FER TILIZER/PETROCHEMICAL REFINERY L PG PGN PLN / ELECTRICITY

(%) 7.3 0.5 0.9

7.69 5.4 0.0 5.8 10.4 3.7 41.6

PSC 7.10 BSCFD

DOMESTIC PROD. 41.6% 8.13 BSCFD

STEEL INDUSTR Y OTHER INDUSTR IES OWN USE LOST / FLARE TOTAL

L NG L PG

47.2 3.7 7.5 58.4 12

EXPORT 58.4%
Source : ESDM, 2006
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GAS PIPELINE TOTAL

II.4. Domestic Petchem Feedstocks Balance Case : Condensate Gas Balance, in 2006
Unit : MTPA
Imported

1.8 2.6

Production
5.8 3.2

Domestic Consumption
PTM : 4.4 TPPI : 1.8

Exports
PTM : PERTAMINA TPPI : TRANS PACIFIC PETROCHEMNICALS IND. Source : Deperin, 2007

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II.4. Domestic Petchem Feedstocks Balance Case : Naphtha Balance, in 2005


Unit : MTPA
Imported

1.3 6.9

Production
7.8

Domestic Consumption
PTM : 6.9 C.A : 1.3

0.9

Exports

Source : Deperin, 2007

PT.PERTAMNA CA : CHANDTA ASRI PETROCHEM INDUSTRY

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II.5 OIL PRICE PREDICTION BY SOME INSTITUTIONS (US $ / bbl )


100 90 80 70 60 50 40 30 20 10 0
A ctual Price FACTS, High Price FACTS, Base Price FACTS, Low Price EIA,High Price, WTI EIA, Ref . Price, WTI EIA, Low Price, WTI PERTA MINA, Ref . Price PERTA MINA, High Price 2000 28.74 2001 24.11 2002 25.6 2003 29.52 2004 36.85 2005 54.01 54.01 54.01 54.01 54.01 54.01 54.01 54.01 54.01 2006 65.80 64.50 52.68 39.30 59.10 55.46 53.70 62.90 66.92 64.75 56.13 39.00 59.26 55.62 53.86 63.60 65.25 69.90 59.69 42.20 59.87 52.30 48.88 63.26 68.35 74.95 63.08 42.40 61.12 50.14 44.91 62.91 67.63 80.40 66.68 42.65 62.65 47.29 40.29 62.57 65.03 91.65 75.61 48.70 76.30 47.79 33.78 63.26 69.81 86.40 68.99 53.00 85.06 50.70 33.99 2007 2008 2009 2010 2015 2020

Indonesia Crude Oil (SLC) Price will be in the range of 56 - 65 US/bbl (in 2007) as per FACTS Prediction

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II. 6. LIMITATION OF GAS, NAPHTHA AND CONDENSATE SUPPLIED FOR DOMESTIC PETCHEM FEEDSTOCKS

A. GAS SUPPLIED AND PRICE : Most of Natural Gas utilized as feed of LNG, LPG (58 %) and only 7,3 % for Petchem Feedstock . Different Gas Price for Fertilizer Plant (Government Subsidy ) and Petrochemical Plants) High World Oil and Gas Price and its impact to Feedstock distribution B. CONDENSATE SUPPLIED. Mainly Condensate Supplied by PSCs (Upstream Production Sharing Contractors) and mostly is exported . For Pertaminas production is own use. C. NAPHTHA SUPPLIED. Mainly Naphtha Supplied by PERTAMINA. Beside own use , it is also exported due to Project Financing Agreement (Product Swap to Lenders ), so some Domestic Indutries should import for their requirements.
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III. OPTIMALIZATION OF NATIONAL PETCHEM FEEDSTOCKS

(Solution required)

A. Domestic Petchem Feedstocks Optimalization : Optimize the utilization of Gas, Naphtha and Condensate ex Domestic Production for Fertilizer Plants, Olefin/Aromatic Plants, due to the facts that there is still huge export of Gas, Naphtha and Condensate but contrary it is also still high quantity imported of naphtha and Condensate for Domestic Petchem feedstock. B. GAS PRICING POLICY FOR PETROCHEMICALS PLANTS. Government to be have the same treatment for Gas Price Policy both utilized as Petchem Feedstock (Fertilizer Plants) and as fuel gas for Power Generation.
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Source : PTM, 2006

IV. OPTIMALIZATION OF PERTAMINAS PETCHEM FEEDSTOCKS FOR OPTIMAL RETURNED

Utilized Sr. Kerosene as Feed of N-Paraffin Plant

Utilized Offgas for producing Propylene

Optimization Plan
Utilized Natural Gas for LNG Plant Projects (Mathindok)

Optimized Gas for Fertilizer Plants

Optimized Gas Production ex Fields for i.e. Petchem Feedstock

Source : PTM, 2006


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IV. 1. Utilizing Off gas ex RCC for Propylene Production

Off gas ex RCC utilized as feed for Propylene Recovery Unit for getting Propylene product.

- PRU should be modified Including Catalyst Cooler, Butane Column etc

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IV.1.a. Simplified Process Flow Diagram of Propylene Plants

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IV. 2, Utilizing Natural Gas as feed of GTL or LNG Plant for Petrochemicals or LNG Production Case : Mathindok Gas Reserves , Central Sulawesi

LUWUK POSO

DONGGI

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IV.2.a. GTL Mathindok Technology

Source : PTM, 2006

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Matindok GTL Technology (Continued)

It is required 4 years minimum to complete the GTL Project until commercial stage
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Source : PTM, 2006

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IV. 3. Utilizing Sr. Kerosene as feed of N-Paraffin Plant


RAW MATERIAL BALANCE ( SR. KEROSENE)

CDU-DM I

19.40

16.10

20.60

NPP - DM I 17.20

3.20

N. PARAFFIN TANK 150,000 TPA

3.30

20.5 2.50 4.50

23.0

UPM S I

HCU-DM I
6.60 2.10

CDU-SPK

DEPO-SIAK

Source : PTM, 2007

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IV.3.a. ABS Process Flow Diagram


(Benzene and N-Paraffin as feed) Refinery
H2 Rich Benzene

N - Paraffin Plants

N_Paraffin
Sr. Kerosene

ABS Plant

Returned Kero

Alkyl Benzene Sulfonates

Source : PTM, 2007

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IV. 4. Optimizing Gas Production from new fields

No
1 2 3

PROJECT
South Sumatera Gas Development (just on production) Cepu Gas Development NGL Gas

Location
South Sumatera (300 MMSCFD) Central & East Java Plaju, South Sumatra

Projects are required for increasing gas supply for domestic market i.e Fertilizer Plants, City Gas and other industries.
Source : PTM, 2006 PT PERTAMINA (PERSERO)
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CONCLUSIONS

There is potential for further development of the Petrochemicals Industry since Indonesia is a producer of feedstock and also there are various that can utilizes petrochemicals products. Condensate and Naphtha for Domestic Supply should be increased in order to match with the requirements, finally it will optimizing the petrochemicals industry Gas Pricing Policy for Petrochemicals Plants beside Fertilizer Plants to be reviewed that also considering the high world oil price and its utilization for Petrochemicals Industry. Promoting of more effective for the utilization of Ethane rich gas resources both for LNG Plants, Public City Gas and as Petrochemicals Feedstock PERTAMINA also has and in progress to get an optimum return by optimalization of Gas, Naphtha and Condensate for Oil and Petrochemicals products.

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