TEMPO.CO, Jakarta - The government has set the Bintuni Bay in West Papua and the Masela Block in Maluku as the locations for the development of gas-based petrochemical industries. Meanwhile, the price assumption set for gas contractors is still above US$5 per MMBtu.

“However, [the location] at the Bintuni Bay is not final yet. The price is to be set based on a formula, instead of a fixed price,” Industry Ministry’s upstream chemical industries director Muhammad Khayam said on Monday, November 20.

According to Khayam, petrochemical investors need to find alternatives to address the issue with high oil and gas prices. Among the alternatives is investing in coal gasification facilities. The conversion of coal to gas is expected to lower the cost although it needs a huge amount of investment.

“We need to encourage [investors] to start [coal] gasification, which is expected to trigger a chain reaction. Some have expressed their interest in the gasification idea, such as Pupuk Indonesia, Pertamina, Chandra Asri, Bumi, and Adaro,” Khayam said.

The domestic petrochemical industry productivity remains below the national demands. Such a capacity shortage, according to Khayam, is reflected by the ethylene product. Demand for ethylene has reached 1.6 million tons per year, while the local production capacity is only 900,000 tons per year.

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