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LOTTE Chemical Signs MOU on Cooperation for Petrochemical Complex with Government of Indonesia and Enters EPC Constructor Selection Agreement

2022.01.07



LOTTE Chemical Signs MOU on Cooperation for Petrochemical Complex with Government of Indonesia

and Enters EPC Constructor Selection Agreement



lotte chemical


█ Invest a total of 3.9 billion USD in Indonesia for the ‘LINE Project’, which is a large-scale petrochemical complex construction project, with the goal of beginning

    commercial production by ‘25... Estimated annual sales of 2.4 trillion KRW

█ Signed MOU with the Indonesian Ministry of Investment and agreed on comprehensive cooperation such as government support for constructing a

    petrochemical complex... EPC contract with LOTTE Construction and Hyundai Engineering, and pursuing project in earnest

█ LOTTE Chemical CEO and Vice Chairman Kim Gyo-hyun, “Expecting to strengthen LOTTE Chemical’s global business competitiveness, while contributing

    to economic growth and job creation in Indonesia through the LINE Project"


LOTTE Chemical (CEO and Vice Chairman Kim Gyo-hyun) finalized an MOU with the Indonesian government and selected constructors as it sets off to pursue the LINE Project in earnest.


LOTTE Chemical announced on the 7th that it held an MOU signing ceremony with the Indonesian Ministry of Investment and an EPC (engineering, procurement, construction) agreement signing ceremony with LOTTE Construction and Hyundai Engineering.


This event was held through online video conferences between representatives from Korea and China. First, LOTTE Chemical CEO and Vice Chairman Kim Gyo-hyun and Indonesian Minister of Investment Bahlil Lahadalia held an MOU signing ceremony. It was followed by EPC contract signings between Lee Gwan-ho of LCI, a subsidiary of LOTTE Chemical Titan that is overseeing the LINE Project, and LOTTE Construction CEO Ha Suk Joo and Hyundai Engineering Plant Division Head Hong Hyun-sung. 


The Indonesian government pledged various incentives such as lowering raw material import tariffs, exemption from import tariffs for various equipment and materials needed for construction of the plant, increase in tax benefits, etc. for the successful completion of the project and commercial production for LOTTE Chemical.


LINE Project is a massive petrochemical plant construction project in which LOTTE Chemical and its subsidiary LOTTE Chemical Titan will build in Banten, Indonesia with the goal of completing by 2025. It is expected to produce 1 million tons of ethylene, 520,000 tons of propylene (PL), 250,000 tons of polypropylene (Pp), and downstream products annually, and post sales of 2.06 billion USD (2.4 trillion KRW) every year.


LOTTE Chemical predicted the growth potential and increase in demand for petrochemical products in the Southeast Asian market early on and acquired Malaysia’s largest petrochemical company, Titan Chemical (currently LOTTE Chemical Titan), back in 2010. It then constructed a naphtha cracking center (NCC) in Indonesia, while pursuing the LINE Project to complete vertical systemization with the existing polyethylene (PE) plant to strengthen its market competitiveness. 


This project involved the construction of the largest naphtha cracker in Indonesia, and it is expected to improve the trade deficit of Indonesia, which currently imports 50% of its total petrochemical product demand, while providing the foundation for the development of the local petrochemical industry.


Vice Chairman Kim Gyo-hyun stated, “The LINE Project is important because it will not only strengthen LOTTE Chemical’s global business competitiveness, but also lead to mutually strategic values such as the economic growth and job creation in Indonesia,” while adding, “I would like to express my gratitude to all stakeholders, and especially the central and local governments of Indonesia that made this project possible. I hope that this large-scale investment by LOTTE Chemical will proceed successfully based on continuous support, thereby being beneficial to the overall economy of Indonesia.”


Minister Bahlil Lahadalia of the Indonesian Ministry of Investment/Investment Coordinating Board (BKPM) commented, “We thank LOTTE Chemical for its investment, and once production begins through the LINE Project, we expect that there will not only be improvements to trade deficits by substituting imports, but also have a positive impact on all industries including petrochemicals in Indonesia.”


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