PT Pertamina expects to reap US$26.98 million in revenue from slack wax sales by the end of this year as the state-run energy firm aims to produce 28,500 metric tons of the byproduct, which is a feedstock for paraffin.
At least 19,380 metric tons or 68 percent of the total estimated production will be exported to main destination countries such as India, Malaysia, Singapore, China, South Korea and the Netherlands.
Pertamina spokesman Ali Mundakir said on Wednesday that domestic demand for slack wax, mainly used by industry players to make matches, shoe polish, candles and cosmetics, had yet to match overseas demand.
“However, we believe that demand will increase in the coming years,” he said, citing that 9,120 metric tons or 32 percent of the targeted slack wax output would be for domestic consumption.
The output target this year is 3.2 percent above the slack wax sales realization last year of 27,500 metric tons, according to Pertamina data.
By definition, slack wax is a mixture of oil and wax, a semi-solid or semi-liquid derivative from the refining of lubricating oil.
Through crystallization, the oil is removed from the slack wax to create solid paraffin.
Pertamina produces several grades of slack wax at its Cilacap lube oil plant in Central Java, including Slack Wax LMO (light machine oil), Slack Wax SPO (spindle oil) and Slack Wax DAO (deasphalting oil).
The most recent grade produced at the Cilacap plant is Slack Wax MMO (medium machine oil), which is feedstock for emulsifying wax mainly used for cosmetics.
“As of mid-April, Pertamina has exported Slack Wax MMO to South Korea. We aim to export 400 metric tons of Slack Wax MMO to South Korea per month before expanding to other countries such as Malaysia, Thailand and the Netherlands,” he said.
By the end of this year, Slack Wax MMO is expected to account for about 44 percent of Pertamina’s total slack wax production.
Earlier this year, in a bid to strengthen its position in the domestic petrochemical market, Pertamina teamed up with PTT Global Chemical, a subsidiary of Thai oil and gas company PTT Pcl, to establish a $5 billion petrochemical complex.
The facility is expected to begin operations in 2017 with a production capacity of around 1 million tons of petrochemical products every year.
The location of the first large-scale, integrated petrochemical complex has yet to be confirmed, but it is projected to have an annual production capacity of around 250,000 tons of ethylene, which is used throughout the chemical industry, along with 350,000 tons of polypropylene for the textile, stationery and plastics sectors.
The plant will also produce 400,000 tons and 200,000 tons of the plastics polyethylene and polyvinyl chloride, respectively.
Pertamina is expected to have at least a 51 percent share in the joint venture while the remaining 49 percent will be held by its partner, Pertamina’s top executives announced last year prior to the selection of PTT Global Chemical.
Pertamina aims to secure 30 percent of the market share in the industry by 2017 with the completion of the planned petrochemical plant and 70 percent by 2025.