Anita Nugraha, Platts Commodity News, Jakarta - 18/04/2011
Deutsche Bank has agreed to provide a $1 billion loan to Indonesia's Trans-Pacific Petrochemical Indotama for use as working capital for the company's oil and aromatics complex in Tuban, East Java, as well as to refinance its debt, a senior Indonesian government official said Friday.
"Deutsche Bank has committed [to the loan]. TPPI is preparing the term sheet currently," Amir Sambodho, from the office of coordinating economy minister Hatta Rajasa, told Platts Friday.
Rajasa said Thursday that in addition to the $1 billion TPPI loan, Deutsche Bank may invest in other energy projects in the country.
TPPI is a joint venture comprising Indonesia's state-owned oil and gas company Pertamina (15%), Indonesia's Tuban Petro (59.5%), Thailand's Siam Cement (17%), and Japan's Sojitz and Itochu with 4.25% each.
The company operates a complex at Tuban that consists of a 100,000 b/d condensate splitter, a reformer and an aromatics unit. The splitter is able to produce 1.065 million mt/year of light naphtha and 1.624 million mt/year of reformate, diesel and kerosene. The aromatics unit can produce 550,000 mt/year of paraxylene, 350,000 mt/year of benzene and 100,000 mt/year of orthoxylene.
The complex is currently operating at only 60% of capacity due to a lack of condensate supply, but the loan from Deutsche Bank will help TPPI boost runs to 100%, Sambodho said.
The complex requires 60,000 b/d of condenstae, but is only able to secure 40,000 b/d currently, he said.
In addition, TPPI will use the loan to repay debt totaling Rupiah 3.2 trillion ($370 million) to the Indonesian government, including Pertamina, which has a due date of 2014, he said.
TPPI's Tuban project was shelved in 1998 at the height of the Asian financial crisis. It was put back on the track in 2004, when TPPI signed loan agreements worth $600 million, including deals with the Japan Bank for International Cooperation and Nippon Export.
The loans were guaranteed by Pertamina through a product swap mechanism under which Pertamina was to supply low sulphur waxy residue to Japan's Mitsui & Co. in return for the Japanese company paying off TPPI's loans to JBIC and Nippon. TPPI was also to supply middle distillates to Pertamina under the deal.
But TPPI's debts to Pertamina soon swelled after it stopped the supply of middle distillates to the company at the end of 2008 due to increasing crude oil prices.
Pertamina spokesman Mochamad Harun said Friday that Pertamina continues to supply LSWR to Mitsui currently, with total volumes delivered every six months amounting to $50 million.
That combined with unpaid dues of about $200 million for condensate that Pertamina has supplied to TPPI, puts the latter's debt to the state-owned company at over $600 million to date, he said, adding that Pertamina supplied condensate to TPPI over 2006-2009.
Harun said that Pertamina decided to go ahead with a lawsuit against TPPI over unpaid debts, after initially considering the possibility of increasing its stake in the company as part of a debt-to-equity conversion.
He said Pertamina filed the lawsuit with Indonesia's arbitration court
Badan Arbitrase Nasional Indonesia -- at the end of 2010. The process is ongoing.