Thursday, 24 September 2026
West Papua has long been known for its natural resources, including its important oil and gas potential. This potential has also attracted interest from international companies. One example was Ferrostaal AG, a German engineering company that planned a major petrochemical investment in West Papua.
The company announced plans to build a petrochemical plant with an estimated investment of around US$900 million. The figure was presented as an estimate and could change depending on the project requirements, including the availability of gas supplies.
The proposed project was designed to use gas from the Tangguh LNG plant as part of its supply. Tangguh LNG is located in the Bintuni Bay area of West Papua and is one of Indonesia’s major natural gas projects.
Producing Methanol and DME
The planned petrochemical plant was expected to produce two main products: methanol and dimethyl ether, commonly known as DME.
The company expected the plant to have an annual production capacity of around 1 million tons of methanol and up to 200,000 tons of DME. Methanol was planned for both domestic and export markets, while DME was intended for the domestic market.
DME is particularly interesting because it can be used as an alternative to liquefied petroleum gas, or LPG. This means the project was connected not only to the petrochemical industry but also to the energy sector.
Why West Papua?
One reason behind the proposed investment was access to natural gas. The company’s plan involved obtaining gas from the Tangguh LNG project, which could provide an important source of feedstock for the petrochemical plant.
Indonesia’s government also saw potential for developing an oil and gas-based industrial cluster in Papua. According to then-Industry Minister MS Hidayat, the availability of gas from the Tangguh field made the proposed petrochemical development feasible.
For an industrial project of this size, infrastructure and energy supply are important factors. West Papua’s natural resources could provide an important foundation, while better infrastructure would be needed to support industrial activity and the movement of products.
A Major Planned Investment
A US$900 million investment would have represented a major international business proposal for West Papua. It also showed how Indonesia’s natural gas resources could attract interest from engineering and industrial companies from Europe.
However, it is important to describe the project accurately: the report concerns Ferrostaal AG’s announced plans, rather than evidence that the US$900 million investment was ultimately completed.
The proposal remains an interesting example of how international companies have looked at West Papua’s potential for petrochemical development. With natural gas resources, industrial opportunities, and the strategic role of the Tangguh area, the region has attracted attention as a possible location for large-scale industrial projects.
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