KDB & Bank Mandiri Finance Lubricant Project Worth US$140 Million

PT Bank Mandiri Tbk and Korea Development Bank (KDB) has agreed to participate in syndicated loans of US$140 million to finance the project of lube base oil group III worth US$200 million.

Bank Mandiri's Director Abdul Rahman said the bank has committed to provide US$90 million.
"We will discuss the final figure later as the presence of new syndication member is possible. It seems the composition is 50:50 with Korea Development Bank, but we may change it," he said two weeks ago when I meet him di Dumai.

He said the interest rate will refer to London inter bank offered rate (Libor). "We will refer to the interest rate of the market. Bank Mandiri is committed to provide up to US$90 million for this project."

The President Director of Pertamina Ari H. Soemarno said Pertamina, in cooperation with SK Corporation Ltd of South Korea, has planned to invest US$200 million on the project of raw material for synthetic lubricant.

The company has established new joint venture, Patra SK. SK controls 65% shares of the company, and Pertamina, through its unit Patra Niaga owns the rest 35%.
The CEO of SK Internasional (H) Pte Ltd Jeong Joon Yu added financial company will provide 60% of the capital while Pertamina and SK will provide the rest 40%.
Ari said SK will buy raw material from Pertamina, and it has been factored in as Pertamina's capital.
At the first stage the company will produce lube base oil group III at the volume of 7,250 barrel per day, and latter will be 10,000 bpd. On May 2008 the company will start its operation.

The company will sell the product in the domestic as well as export market like the East Asia and the Europe. But he added that the product will mostly for export as the price will be expensive and the target market will be the high class segment.

Pertamina, he said, will have the right to sell the product in the domestic market, while SK will be responsible to sell the product overseas.

"The project will be profitable as the revenue could reach US$300 million per annum. The margin will be around 10% so that many banks have been interested in financing the project."
Ari said Pertamina will run the project as the raw material will be from the oil block of Minas.