Methanol Industry in Indonesia 2010 -February 2010

INDONESIAN COMMERCIAL NEWSLETTER

February 2010

METHANOL INDUSTRY IN INDONESIA

Methanol or methyl alcohol is an upstream petrochemical product derived from natural gas. This chemical compound is produced in a catalytic synthesis reaction at low pressure with partial oxidation of natural gas.

Methanol is used in a various industries such as in the manufacture of plywood, textiles, plastic, synthetic resin, pharmaceuticals, insecticides and many others.

It is also used as a solvent, dehydrating agent, coolant and denaturant. The raw material of bonding agents, such as paraform, polymerization of formaldehyde. Methanol is also used as a substitute for methylated spirit in the production of formalin.

In the oil and gas industry, methanol is used as antifreeze and as a gas hydrate inhibitor at natural gas wellheads and in gas piping and cylinders. A very small amount of methanol in the gas, less than 2,5 gallons in a million cubic feet (approx. 28,000 liters), usually prevents gas hydrate formation by absorb¬ing the moisture present.

The petroleum industry uses methanol as a mercaptan extract¬ant in the treatment of crude and Methanol is also finding increas¬ing use as a component of oil well fracturing fluids.

Methyl tertiary butyl ether (MTBE), a high octane blending component for gasoline, is prepared by the reaction of isobuty¬lene with methanol.

A derivative of methanol, a source of energy now being developed as an alternative to LPG (Liquefied Petroleum Gas) is Di methyl Ether (DME). This fuel is produced from methanol, which is derived from various sources such as natural gas or coal. Now in Indonesia, a technology is being developed to produce methanol through the process of gasification low calorie coal to produce DME.

In Indonesia, the largest users of methanol are producers of formaldehyde and derivatives such as. Urea formaldehyde, phenol formaldehyde, and melamine formaldehyde (adhesive resin).

This chemical compound is a colorless liquid which burns easily with a blue flame. It is extremely volatile, soluble in water with a boiling point of 64.5°C, and a freezing point 97.8°C. The methanol specifications produced by Pertamina Bunyu are outlined in the following table.

Producers of Methanol

Indonesia has two methanol plants Bunyu Methanol Plant of PERTAMINA and another owned by PT Kaltim Methanol Industry in Bontang, East Kalimantan with a total production capacity of 990,000 ton per year.

The Bunyu Methanol Plant in the district of Bunyu, regency of Bulungan started operation in 1985 by the fifth Production Unit of Pertamina (UP V) in Balikpapan, but in 1997 its operation was taken over under Joint Operation Contract (KSO) by PT. Medco Methanol Bunyu. The plant has a production capacity of 1,000 tons per day or 330,000 tons per year.

In March, 2009, the operation of the Bunyu Methanol Plant (KMB) under PT Medco Methanol Bunyu, a subsidiary of PT Medco Energi Internasional tbk, was stopped over shortage of gas supply.

Earlier on 1 February 2009, the operation of the plant was already suspended and in May with shrinking supply of gas it was entirely stopped. The operation of the plan was stopped as gas supply was too low enough to allow it to operate at 30% of its capacity. The operation would not be efficient. It could operate efficiently if it has gas supply at least 85% of its total requirement.

The plan will operate at full capacity if its has gas supply of at least 32 MMSCFD. Under the Joint Operation Contract (KSO) with PT. Pertamina, the plant was supplied with gas from the PSC Tarakan Block and PSC Bunyu Block operated by Pertamina.

Later with gas supply from the two blocks was not enough as their production was shrinking. In 2008, gas supply came only from PSC Tarakan Block, which could supply only around 13 MMSCFD until January, 2009.

PT. Kaltim Methanol Industri

PT. Kaltim Methanol Industri is located in Bontang, in the industrial estates of PT. Kaltim Industrial Estate, East Kalimantan. Its factory was built in 1997 and was completed in February 1998. On 29 July, 2000 the factory started commercial operation with an installed capacity of 660.000 MTPY producing pure methanol grade AA (purity min 99.85%).

PT KMI uses natural gas from Badak Gas Field Center, which is owned by Total FinaElf Indonesie, Vico Indonesia and Chevron. The first gas supply was received on 23 January 1997 and plant commissioning took place marking the start-up on 31 March 1997.

......

See list of contents>>