Balikpapan, E. Kalimantan. Indonesia plans to build a gas-based petrochemical processing hub in East Kalimantan as the government seeks to capture more value from new gas discoveries and generate jobs and regional revenue.

Energy and Mineral Resources Minister Bahlil Lahadalia said Thursday the project would use natural gas as feedstock for petrochemical production, linking expanding supplies to higher-value industrial output.

“We will build a petrochemical processing hub in East Kalimantan using gas as feedstock,” Bahlil said during a visit to the Jangkrik floating production unit, located about 12 miles offshore from Kutai Kartanegara regency.

He said the development was needed as new gas discoveries increased the region’s potential supply, adding that expanded production and downstream processing should match greater availability of raw materials.

The government also wants the facility to ensure local communities benefit more directly from the region’s natural resources. Bahlil said locating the hub in East Kalimantan would help create jobs, raise household incomes, and increase regional government revenue.

“We have chosen to ensure that regions (outside of Java) also receive a share of the benefits from their natural resources,” he said, adding that industrial development should create value and employment where the resources are produced.

Indonesia has been pushing to expand domestic processing of natural resources to move beyond exporting raw commodities and capture more value through manufacturing. Petrochemicals are used to produce a wide range of materials, including plastics and industrial chemicals.

Exploration offshore East Kalimantan is continuing, with Italian energy company Eni and Searah searching for additional oil and gas resources. Searah is a 50-50 joint venture between Eni and Malaysia’s national oil company, PETRONAS.

Two gas wells, Jangkrik North East-6 and Maha, have recently begun operating. The government says they could help lift oil and gas production potential by as much as 750 million cubic feet per day.

Bahlil did not provide a construction schedule, investment value or projected production capacity for the proposed petrochemical hub.

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