Chandra Asri Declares Force Majeure Amidst Middle East Conflict

Jakarta, Indonesia – PT Chandra Asri Pacific Tbk (TPIA), the petrochemical arm of Indonesian conglomerate Barito Pacific Group, controlled by billionaire Prajogo Pangestu, has declared force majeure due to disruptions in raw material shipments through the Strait of Hormuz. The move comes amid escalating tensions in the Middle East following recent conflicts in the region, impacting global supply chains.

The company notified its business partners on March 2nd, citing the ongoing military conflicts as the primary cause for the disruption, according to a statement released by Chandra Asri’s Director of Human Resources & Corporate Affairs, Suryandi. The notification adheres to standard contractual provisions, the company said.

Supply Chain Vulnerabilities in a Critical Petrochemical Hub

Chandra Asri, Indonesia’s largest integrated petrochemical complex, produces olefins and polyolefins – essential building blocks for plastics and other materials. The Strait of Hormuz is a vital chokepoint for global energy supplies, with approximately 20% of the world’s oil and natural gas liquids transiting the narrow waterway. CNBC Indonesia reports that the number of tanker ships passing through the strait has decreased significantly since the recent outbreak of conflict.

The force majeure declaration signals a potential slowdown in Chandra Asri’s operations, as the company anticipates difficulties in securing consistent supplies of necessary feedstocks. The company did not specify the duration of the force majeure, stating that it is actively monitoring the evolving situation between the United States, and Iran.

Prajogo Pangestu’s Empire and Petrochemical Dominance

Prajogo Pangestu, born Phang Djoen Phen in 1944, is the founder of Barito Pacific Group, a diversified conglomerate with interests spanning forestry, plantations, oil and gas, coal, gold mining, and geothermal energy. According to Wikipedia, Barito Pacific Timber Tbk was the largest listed company on the Jakarta Stock Exchange in 1993. Today, his net worth is estimated at $43.41 billion, making him the wealthiest person in Southeast Asia. Chandra Asri Pacific Tbk is a core component of the Barito Pacific portfolio, representing a significant portion of the group’s revenue and profitability.

Beyond Chandra Asri, Pangestu controls Barito Renewables, which owns Star Energy Geothermal, a leading geothermal company in Indonesia. This diversification into renewable energy sources reflects a broader trend among Indonesian conglomerates to invest in sustainable energy solutions.

Impact on Petrochemical Markets and Indonesian Industry

The force majeure declaration by Chandra Asri highlights the vulnerability of petrochemical supply chains to geopolitical instability. Disruptions in feedstock supplies could lead to increased production costs and potentially higher prices for downstream products, impacting a wide range of industries in Indonesia and beyond. The company operates a complex with a capacity of around 237,000 tons per year, according to company information.

Indonesia is a significant consumer of petrochemical products, relying heavily on imports to meet domestic demand. A prolonged disruption at Chandra Asri could exacerbate existing supply constraints and potentially lead to shortages. The Indonesian government is likely to be closely monitoring the situation and may consider measures to mitigate the impact on the local economy.

Mitigation Strategies and Operational Adjustments

To mitigate the impact of the supply chain disruptions, Chandra Asri plans to reduce operational rates at its manufacturing facilities. The company is also coordinating with customers to manage expectations and minimize potential disruptions. Suryandi stated that the company is taking proactive steps to ensure operational resilience across all its business units.

This operational adjustment suggests a cautious approach by Chandra Asri, prioritizing the stability of its core operations over maximizing production output in the short term. The company’s ability to effectively manage its supply chain and maintain customer relationships will be crucial in navigating the current challenging environment.

Recent Acquisitions and Expansion Plans

Despite the current challenges, Chandra Asri continues to pursue strategic growth initiatives. In October 2025, the company agreed to acquire ExxonMobil’s Esso-branded fuel stations in Singapore, as reported by Forbes. This expansion into the retail fuel market represents a diversification of Chandra Asri’s business portfolio and a strategic move to capitalize on growth opportunities in the Southeast Asian region.

Force Majeure and Contractual Implications

Declaring force majeure is a legal step that allows a company to suspend contractual obligations due to unforeseen circumstances beyond its control. The specific terms and conditions of the force majeure clause will determine the extent of Chandra Asri’s obligations to its customers and suppliers. The duration of the force majeure will depend on the resolution of the conflict in the Strait of Hormuz and the restoration of normal shipping routes.

According to Katadata, the company sent a notice to customers on March 2nd regarding the disruptions. The length of the force majeure is currently uncertain.

Looking Ahead: Monitoring Geopolitical Risks

Chandra Asri’s management has emphasized its commitment to maintaining operational continuity and business resilience in the face of ongoing global uncertainties. The company will continue to closely monitor the geopolitical situation in the Middle East and assess the potential impact on its operations. The situation in the Strait of Hormuz remains volatile, and further escalation of the conflict could lead to more significant disruptions in global supply chains. Investors will be closely watching Chandra Asri’s performance in the coming months to gauge the extent of the impact from the force majeure declaration and the broader geopolitical risks.