PT Panca Amara Utama (PT Surya Esa Perkasa Tbk.’s subsidiary) ammonia factory in Banggai Regency, Central Sulawesi as local business initiative to lead the development of one of Indonesia’s largest industrial projects in the last decade
On 2 August 2015, the President of Indonesia, Joko Widodo (Jokowi), inaugurated the groundbreaking of PT Panca Amara Utama’s (PAU) ammonia facility in Banggai Regency, Central Sulawesi. PAU was established by PT Surya Esa Perkasa Tbk. (SEP), the first publicly-listed LPG refinery on the Indonesia Stock Exchange (ticker: ESSA).
The factory to be constructed on a landbank of 192 hectares and an investment of US$830 million, underlines PAU’s commitment in supporting the government’s directive of significant value addition to Indonesia’s natural resources, particularly the usage of natural gas as a raw material in the production of ammonia.
In addition to the groundbreaking, the President inaugurated the Mega Integrated Pertamina Projects, that include the JOB Pertamina Medco E&P Tomori Sulawesi (JOBPMTS) Central Processing Plant, PT Donggi – Senoro LNG’s first cargo shipment and the operation of GG Pertamina Hulu Energi Offshore North West Java (PHE-ONWJ).
PAU President Director Garibaldi Thohir said that the President’s groundbreaking of its ammonia factory proves that the facility stands to play an important role in boosting the growth and development of the national manufacturing industry.
“We are pleased that today’s groundbreaking proceeded smoothly. We hope that the construction of this ammonia factory will conclude according to schedule and will positively contribute to the Indonesian economy, particularly Sulawesi and the eastern parts of Indonesia.”
Garibaldi explained that the factory will produce ammonia, a chemical compound used to manufacture fertilizers, explosives, acids and other petrochemical products. The facility features an annual production capacity of 700,000 tons, with 55 million standard cubic feet per day (MMSCFD) of natural gas to be supplied from the Senoro – Toili Block, operated by JOBPMTS.
In developing its project, PAU has appointed PT Rekayasa Industri, a renowned state-owned construction company as the primary contractor. The PAU factory will feature the leading ammonia technology in the world, namely the KBR Reforming Exchanger System (KRES) and Purifier from Kellogg Brown & Root (Houston, USA), the latest in energy-efficient technology. The application of this technology in PAU will be the first in Asia and will place Indonesia at the forefront of ammonia production globally.
“We are very proud that our project in Banggai Regency is a domestic initiative and involves a national contractor. This truly is a project that will be built by the men and women of Indonesia by maximizing our country’s natural resources,” said Garibaldi.
PAU Project to Generate Multiplier Effect
The PAU ammonia production project is certain to generate a multiplier effect that will positively contribute towards the Indonesian economy and boost economic growth in the eastern parts of the country, particularly in terms of social empowerment and business growth while creating job opportunities in Banggai, Central Sulawesi.
“PAU is highly committed to empower the communities in which we work in. We are certain and hope that the project will proceed smoothly, thereby providing maximum benefits to the local populace as well as the country,” said PAU Executive Director Vinod Laroya.
Previously in 2014, PAU secured a US$509 million syndicated loan facility led by the International Finance Corporation (IFC), the reputed private arm of the World Bank, as well as seven international banks.
“IFC’s investment in PAU is the largest in Asia in the last decade and reflects the strong trust towards PAU as well as Indonesia’s investment potential. Additionally, the project supports the use of significant local content for construction – 61 percent of the Project Cost and 87 percent of the Operating Cost will be spent in Indonesia,” explained Vinod.
Meanwhile, as parent company, PT Surya Esa Perkasa Tbk. (SEP) extends its full support towards PAU’s ammonia factory in East Indonesia.
PT Surya Esa Perkasa Tbk. Director, Isenta Hioe, said that the PAU ammonia factory offers significant value in strengthening the Company’s business. As the largest shareholder in PAU, the ammonia facility will contribute to SEP’s performance and fundamentals, thereby ensuring the maximum growth of the company’s value.
“The PAU ammonia factory will not only contribute to the Indonesian economy, but hopefully catalyse growth in East Indonesia. As a shareholder, SEP’s fundamentals will certainly become more solid and add to the company’s value in the long term,” said Isenta.
About PT Panca Amara Utama
PT Panca Amara Utama is a subsidiary of PT Surya Esa Perkasa Tbk, which controls 60 percent of shares in PT Panca Amara Utama. SEP was established in 2006 to become the leading company in LPG and Condensate production while looking to play an active role in national self-sufficiency of LPG, petrochemical, chemical and downstream gas value-added products. Its main business is the refining and processing of natural gas to produce LPG (liquefied petroleum gas) and Condensate. SEP owns and operates the second largest domestic LPG refinery in Indonesia (excluding PSC operator), with its production facility located in Palembang that started commercial operations in 2007. On February 1, 2012, SEP became the first LPG refinery to list on the Indonesia Stock Exchange (ticker: ESSA).
PAU, a subsidiary of SEP, will construct a fertilizer factory through the use of natural gas from the Senoro-Toili (Donggi-Senoro) gas field in Central Sulawesi, and receive 55 MMSCFD worth of gas supply from JOB Pertamina-Medco E&P Tomori Sulawesi to produce ammonia.