South Korea’s Lotte Chemical plans to source U.S. liquefied petroleum gas (LPG) for its newly completed petrochemical complex in Indonesia — a move expected to improve cost efficiency while supporting a recent tariff-reduction agreement between Washington and Jakarta.
According to Bloomberg, Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto said Lotte Chemical has applied to import roughly 1.3 million tons of U.S. LPG, as part of a 5.5 million-ton quota allocated to the private sector. The application is currently awaiting regulatory approval.
The company’s new facility — known as the LINE Project — centers on a naphtha cracker capable of processing both naphtha and LPG into core petrochemical products such as ethylene and propylene.
While naphtha remains the primary feedstock, the plant can substitute up to 50% of its input with LPG, enabling Lotte Chemical to reduce production costs and adjust output based on market conditions. This flexibility also allows the company to optimize yields of ethylene and by-products.
Indonesian officials say expanded use of U.S. LPG could help cut broader crude-derived feedstock imports. The government estimates that dual use of naphtha and LPG at the complex could offset as much as $1.4 billion in petroleum-related imports each year.
The move also aligns with a new U.S.–Indonesia trade deal that reduces import tariffs on LPG and gasoline from 32% to 19%, in exchange for Jakarta agreeing to source roughly $15 billion in fuel products from the United States. The agreement offers Indonesia cheaper energy inputs while ensuring stable long-term demand for American exporters.
For Lotte Chemical, securing competitively priced U.S. LPG strengthens the economics of its new Indonesian investment. The LINE Project — located in Cilegon, Banten Province — represents a $3.95 billion build-out of an integrated petrochemical hub.
Completed in May and inaugurated earlier this month, the complex will produce 1 million tons of ethylene, 520,000 tons of propylene, 350,000 tons of polypropylene, 140,000 tons of butadiene, and 400,000 tons of BTX annually.
Industry analysts say the mix of flexible feedstock options, tariff reductions, and reliable U.S. supply could make the Indonesia complex one of Lotte Chemical’s most strategically important overseas assets, strengthening the company’s competitiveness in the Asia-Pacific petrochemical market.
