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Sinar Mas Cepsa start up bio-based fatty alcohol plant in Indonesia

Sinar Mas Cepsa has inaugurated its first oleochemicals plant in Indonesia. Representing an EUR 300 million investment, the plant will produce fatty alcohols from sustainably-sourced palm kernel oil (PKO), a key ingredient in the manufacture of everyday products such as household cleaning goods and personal care products. The inauguration ceremony in Dumai, Sumatra was attended by officials and dignitaries from the Indonesian Ministry of Industry.

Sinar Mas Cepsa has inaugurated its first oleochemicals plant in Sumatra, Indonesia. The Dumai plant will produce 160 000 tpa fatty alcohols from sustainably-sourced palm kernel oil (PKO) supplied by Golden Agri-Resources (photo courtesy Cespa).

Sinar Mas Cepsa is a wholly-owned joint venture (JV) between Spain-headed Cepsa, a leading integrated energy company and world leader in the production of linear alkylbenzene (LAB) used to make biodegradable detergents and Singapore-headed Golden Agri-Resources (GAR), part of the Indonesian consortium of Sinar Mas businesses and the world’s second largest vertically-integrated palm oil company.

This joint venture was created with a mutual vision to develop a global leading position in fatty alcohols and its derivatives, based on a supply of sustainably sourced raw materials. Sinar Mas Cepsa’s vertical integration and the launch of the Dumai plant is a critical step in achieving this vision, said Franky Widjaja, Chairman and CEO of GAR.

GAR’s Lubuck Gaung refinery, which is certified by the Roundtable on Sustainable Palm Oil (RSPO) and located nearby, supplies the Dumai plant with sustainable, traceable palm kernel oil (PKO). The plant has an annual production capacity of 160 000 tonnes of fatty alcohol. It is also fully self-sufficient, capable of producing its own electricity, treating its wastewater and managing its own logistics.

If we try to summarise in just one word this project within Cepsa, I would say the word is ‘New’. New feedstocks. It’s the first time that we will produce chemical products that are not derived from petrol, but are instead vegetable-based, new location, new business and new market, said José María Solana, Deputy CEO of Sinar Mas Cepsa.

The Dumai plant will primarily focus on markets in Asia. Sales of vegetable-based alcohols, rather than conventional petroleum derivatives, are increasingly in demand as a raw material for personal care products and liquid detergents. The plant will also service demand from Sinar Mas Cepsa’s surfactant plant in Germany, which serves markets in Eastern and Western Europe.

The Dumai plant leverages Cepsa’s technology and expertise in oleochemicals, and relies on GAR for raw materials—marking the second plant of this partnership. Having already secured a foothold in Europe through the acquisition of our surfactant plant in Germany, we will definitely look into further downstream projects or expansion capacity in this part of the world, said Kung Chee Whan, CEO, Sinar Mas Cepsa.

According to Cepsa, the global market for fatty alcohols is predicted to expand to 4.1 million tonnes by 2025, up from 3.1 million tonnes in 2016, demonstrating a five-year compound annual growth rate (CAGR) of 3.5 percent. Of this, a bulk of the revenue generated will come from Asia which currently commands over 40 percent of overall demand.

The plant also helps to consolidate Cepsa’s position in Asia following the inauguration of its Shanghai plant in 2015, which made the company the world’s second-largest producer of phenol used to produce next-generation plastics.

Cepsa’s chemicals business is key to our growth strategy. We have a diversified portfolio, and we are leaders in those areas where we operate in the chemical industry. Our entrance into the fatty alcohols market is another step in our internationalization plan, and of course, we are doing it alongside the best possible partner, said Pedro Miró, Cepsa’s CEO.

About Cepsa & Golden Agri-Resources

Cepsa is an energy group fully owned by the Mubadala Investment Company and operates at every stage of the hydrocarbon value chain: exploration and production of oil and gas, refining, distribution and marketing of crude oil and natural gas derivatives, biofuels, co-generation and electricity sales. It has chemicals division that is closely integrated with the refining business, and that produces and markets the raw materials for high value-added products, principally used to make next-generation plastics and biodegradable detergents.

Golden Agri-Resources (GAR) is a leading palm oil plantation companies with a planted area of more than 480 000 ha (including smallholders) in Indonesia. It has integrated operations focused on the production of palm-based edible oil and fat. In Indonesia, its primary activities include cultivating and harvesting of oil palm trees; processing of fresh fruit bunch (FFB) into crude palm oil (CPO) and palm kernel oil (PKO), merchandising and refining CPO into value-added products. It also has operations in China and India including a deep-sea port, oilseeds crushing plants, production capabilities for refined edible oil products as well as other food products.

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