By Mohi Narayan
BANGKOK (Reuters) -Lotte Chemical plans to start operations at its new cracker in Indonesia in the second half of 2025, an executive at Lotte’s Malaysia affiliate said on Friday.
The new cracker which has the capacity to produce 1 million metric tons per year of ethylene is part of a $3.95 billion project at Cilegon, in Indonesia’s Banten province. The facility is starting up at a time when petrochemical companies globally are facing lower margins because of an oversupply from China.
To manage its finances, Lotte Chemical reduced its stake in the Indonesia project to 24% from 49% earlier this year after selling the equity to a consortium of five Korean financing companies, Philip Kong, executive vice president, corporate planning at Lotte Chemical Titan (LCT) told Reuters. LCT owns 51% of Lotte Chemical Indonesia.
The company is looking to secure naphtha from the Middle East as feedstock for the cracker, he said on the sidelines of the Asia Petrochemical Industry Conference.
Lotte can also switch up to 50% of its naphtha feedstock at the Indonesia cracker to natural gas liquids such as liquefied petroleum gas (LPG) and ethane, whichever is cheaper, he added.
In Malaysia, LCT has shut one of its crackers since mid-December and is operating the complex at 45%-50% of its capacity, said Kong, who is also the vice president of Malaysian Petrochemicals Association.
Local media reported that the company is planning to sell its assets.
“The petrochemical industry is now going through a trend of consolidation, mergers and acquisitions, so we are exploring all angles to increase shareholder value,” Kong said.
(Reporting by Mohi Narayan; Writing by Florence Tan; Editing by Christopher Cushing and Christian Schmollinger)
