South Korea’s Lotte Group has resumed the construction of a USD 3.9 billion petrochemical project in Indonesia, paving the way for realizing the group’s plan to expand the business in the region. In January 2022, Lotte Chemical Corp., the group’s petrochemical unit, signed an MoU with Indonesia’s Ministry of Investment to build the petrochemical complex in Banten, the westernmost province of the island of Java.
Indonesian subsidiary PT Lotte Chemical Indonesia (LCI) will be signing the engineering, procurement and construction (EPC) contracts for Group A work package of the LINE project. Under this package, it will sign an onshore construction contract with PT Hein Global Utama — a joint venture between Hyundai Engineering Co Ltd (Hyundai) and PT Hans Enjiniring dan Konstruksi — while it will sign an offshore engineering and procurement contract with Hyundai.
The EPC works will comprise the construction of a cracker plant with the capacity to produce, amongst others, 1,000 KTA of ethylene and 520 KTA of propylene. The total contract value of the Group A EPC work package is approximately USD 757.2 million.
LCI will also sign the EPC contracts for Group B and C work packages concurrently with the Group A work package, which include the work of downstream plants and infrastructure facilities.
The Indonesian government has agreed to provide Lotte with tax exemptions, including lowering tariffs on its products, as a return for the company’s investment.
(Sources: Lotte; Global Construction Review; The Edge Markets)