Two Indonesian firms to build SE Asia's first seamless pipe factory

Jakarta (ANTARA) - PT Inerco Global International has formed a strategic partnership with PT Artas Energi Petrogas to establish Southeast Asia's first seamless pipe factory in Cilegon, Banten.

Hendrik Kawilarang Luntungan, CEO of PT Inerco Global International, and Jose Antonio Reyes, CEO of PT Artas Energi Petrogas, signed the cooperation agreement, valued at Rp5 trillion (around US$324.62 million), to fund the factory's operation within the Krakatau Steel Industry Complex.

"With the Indonesian government's efforts to increase domestic oil production, there is a yearly demand for 500,000 tons of seamless steel pipes for the country's oil and gas industry," Luntungan said on Thursday.

He noted that Indonesia currently imports steel pipes worth Rp15 trillion annually. He expressed hope that the operation of the seamless pipe factory would help the country save on foreign exchange.

"This project aligns with President Jokowi's (Joko Widodo) vision of transforming Indonesia into an industrial nation, promoting domestic value addition," he said.

Luntungan said that PT Artas Energi Petrogas, an Indonesian seamless pipe manufacturer, has an annual production capacity of 250,000 tons.

However, he acknowledged that the factory's domestic component level (TKDN), or local content, is currently only 43–50 percent as it imports raw materials.

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"Our goal is to increase the TKDN value to 95 percent," he said.

Inerco is a seasoned steel pipe provider in Indonesia. Since its establishment in 2008, the company has specialized in selling electric resistance welding (ERW) pipe products and seamless pipes for oil and gas drilling and distribution.

Inerco's primary customers include leading oil and gas companies, including Chevron and Pertamina.