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Cilegon Plant - LOTTE Indonesia New Ethylene (LINE). Credit: PT Lotte Chemical Indonesia

PT Lotte Chemical Indonesia (LCI) is undergoing a transformative phase marked by significant investment, new long-term supply agreements, and persistent industry headwinds. The company’s strategy and recent developments provide insight into both its growth ambitions and the broader challenges facing the Southeast Asian petrochemical sector.

Major Expansion: New Cracker Facility

LCI is set to commence operations at its new mixed-feed cracker in Cilegon, Banten province, Indonesia, in the second half of 2025. This facility, part of a $3.95 billion investment, will have an annual production capacity of 1 million metric tons of ethylene. The new cracker is a central component of the Lotte Chemical Indonesia New Ethylene (LINE) project, which aims to strengthen the company's upstream integration and supply chain resilience.

Strategic 10-Year Ethylene Supply Deal

In May 2025, LCI secured a 10-year ethylene supply contract with PT Asahimas Chemical, an integrated chemical producer in Indonesia. The contract, effective from July 1, 2025, to June 30, 2035, commits LCI to supply approximately 150,000 tonnes of ethylene per year to Asahimas Chemical. The agreement’s value is expected to exceed 10% of Lotte Chemical Titan (the Malaysian-listed parent)'s latest annual consolidated revenue, underlining its financial significance. Pricing for the contract is pegged to prevailing market rates, ensuring flexibility in a volatile market environment. The long-term deal provides both revenue stability for Lotte Chemical and supply security for Asahimas, supporting downstream chemical industries in Indonesia.

Financial and Market Pressures

Despite these strategic moves, Lotte Chemical Titan continues to face financial challenges. The company reported its eighth consecutive quarterly loss in Q1 2025, though losses narrowed year-on-year due to improved product spreads and contributions from its US associate. For Q1 2025, Lotte Chemical Titan posted a net loss of RM125.67 million, compared to RM178.03 million a year earlier, with revenue dropping 22.3% to RM1.49 billion on lower sales volume and prices. The global petrochemical sector is currently experiencing margin compression due to oversupply, particularly from China, which has weighed on profitability and forced companies like Lotte Chemical to operate existing Malaysian crackers at reduced capacity (45%-50% since December 2024).

Ownership Restructuring and Strategic Flexibility

To bolster its financial position, Lotte Chemical reduced its stake in the Indonesian venture from 49% to 24% in early 2025, selling the shares to a consortium of South Korean financial institutions. Lotte Chemical Titan retains a 51% stake in Lotte Chemical Indonesia. The company is also exploring feedstock flexibility for the new cracker, planning to source naphtha from the Middle East and potentially substitute up to 50% of naphtha feedstock with natural gas liquids such as LPG or ethane, depending on market economics.

Sector Outlook and Strategic Positioning

The Southeast Asian petrochemical industry is in a phase of consolidation, with mergers and acquisitions on the rise as companies seek to enhance shareholder value amid challenging conditions. Lotte Chemical’s long-term supply contract and the new Indonesian cracker position it to capitalize on regional  demand growth, even as it navigates short-term market volatility and restructuring pressures. The new supply agreement is not expected to impact the company’s share capital or ownership structure, maintaining stability for investors.

Conclusion

Lotte Chemical Indonesia’s ambitious expansion and strategic supply agreements reflect a commitment to long-term growth and regional market leadership. However, the company continues to navigate a difficult economic landscape characterized by global oversupply, margin pressure, and the need for financial restructuring. The coming years will be pivotal as the new cracker comes online and the company seeks to leverage its strengthened position in Indonesia’s growing chemical sector.

#lotte  #lottechemical  #indonesia  #malaysia  #lci  #lineproject  #cilegon  #asahimas  #agc  #asahiglass  #ethylene  #steamcracker  #ethyleneplant 

PT Lotte Indonesia LINE (LOTTE Indonesia New Ethylene) project has been partly modeled, some technologies have been (presumable) identified and mass balance mostly developed. Due to some uncertainties, the MB is yet not complete.


#lotte  #indonesia  #line  #mfc  #mixedfeedcracker 

CSPCL Huizhou Petrochemical Plant / Shell

Beijing, China, February 22, 2016 -- CNOOC and Shell Petrochemicals Company Limited (CSPC), a joint venture between Shell Nanhai B.V. and CNOOC Petrochemicals Investment Ltd., has officially announced the third phase of expansion for its petrochemical complex in Daya Bay, Huizhou, Guangdong Province. This ambitious project, valued at $6.7 billion, represents a significant step forward in meeting China's growing demand for petrochemical products.

The expansion will include the construction of a third ethane cracker with a planned capacity of 1.6 million tonnes per year (tpy) of ethylene, boosting the complex's total ethylene production capacity to 3.8 million tpy. Ethylene serves as a key building block for plastics and other essential chemical products. Alongside the cracker, the project will add 16 downstream derivatives units producing specialty chemicals including linear alpha olefins, Bisphenol-A (240,000 topy), polycarbonates (260,000 tpy), and diphenyl carbonate (220,000 tpy).

Linear alpha olefins are vital for manufacturing detergent alcohol and synthetic lubricants, while polycarbonates are used in impact-resistant plastics that can replace carbon-intensive steel. Carbonate solvents play a critical role in lithium-ion batteries, supporting the electric vehicle sector and energy storage solutions.

The new facilities aim to meet domestic demand across various industries, including agriculture, construction, healthcare, and consumer goods.

Scheduled for completion by 2028, the project incorporates innovative technologies to reduce environmental impact. CSPC plans to electrify compressor units and increase renewable energy usage to achieve a 20% reduction in carbon dioxide emissions, aligning with China's carbon neutrality goals.

#sustainabilitygoals  #steamcracker  #ethanecracker  #ethylene  #cnooc  #cspc  #shell  #china  #huizhou  #guangdong  #sustainability  #linearalphaolefins  #lao  #polycarbonate  #electrification  #renewableenergy  #carbonemissions  #neutralitygoals 

CNOOC Shell Huizhou Petrochemical Complex in Daha Bay, Huizhou, China

January 15, 2015 | BEIJING | Shell China

CNOOC Shell Petrochemicals Limited (CNOOC Shell), a joint venture between Shell Nanhai Private Limited and CNOOC Petrochemical Investment Co., Ltd., has made the final investment decision to expand its petrochemical complex at Daya Bay, Huizhou, southern China.

The project will include the construction of a third ethylene cracker with a planned annual capacity of 1.6 million tons, a key component in the production of plastics, as well as a series of downstream derivative units, including linear alpha olefins.

The investment will also build a new facility for the production of high-performance specialty chemicals such as polycarbonates and carbonate solvents that are essential to everyday life.

Linear alpha olefins can be used to produce detergent alcohols and synthetic lubricant base stocks. Polycarbonates can be used to make impact-resistant plastics, replacing carbon-intensive steel, while carbonate solvents are used in lithium batteries, which are crucial for the electric vehicle sector and energy storage.

Designed primarily to meet China’s domestic demand, the new facility will produce a wide range of chemicals used in the agriculture, industry, construction, healthcare and consumer goods sectors.

The investment will enhance CNOOC Shell’s competitiveness by expanding its product value chain, promoting its further integration with existing chemical plants, and promoting its development of stronger innovation capabilities to meet the rapidly growing customer needs in the Chinese market.

"For more than two decades, CNOOC Shell has been providing high-quality products to the Chinese market and has become one of the largest Sino-foreign petrochemical joint ventures in China," said Huibert Vigeveno, Director of Downstream and Renewables Business of Shell Group.

“This new investment is a key enabler for CNOOC Shell’s strategic transformation towards higher-end and differentiated chemicals. It is consistent with Shell Chemicals & Refining’s strategy of pursuing targeted business growth in strong regions. It is also a testament to our strong partnership with CNOOC.”

The expansion is expected to be completed in 2028.


#olefins  #ethylene  #propylene  #butenes  #steamcracking  #olefinplant  #linearalphaolefins  #lao  #polycarbonate  #shell  #cnooc  #jointventure  #china  #refining 

Full Density Range Polyethylene has been added.


#fdpe  #polyethylene  #fulldensity  #hdpe  #lldpe  #mdpe  #linearpolyethylene 

The INEOS Linear Alpha-Olefins (LAOs) Process, formerly Ethyl Process, has been created.

#lao  #linearalphaolefins  #ineos  #alphaolefins  

The description of the ethylene oligomerization process into LAOs has been updated.

#ethylene  #butene  #hexene  #octene  #lao  #linearalphaolefins  #oligomerization