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Specialty chemical company Celanese Corporation (CE - Analyst Report) recently entered into an agreement with Pertamina – the state-owned energy company of Indonesia – for the development of fuel ethanol projects.

As per the agreement, Pertamina will collaborate exclusively with Celanese to jointly develop synthetic fuel ethanol in Indonesia by deploying Celanese’s proprietary TCX ethanol process technology.

Celanese TCX Technology is an innovative ethanol production process that helps meet transportation fuel needs by converting domestic natural gas and coal feedstocks to liquid fuel.

Celanese will be working with Pertamina to meet Indonesia’s growing need for liquid transportation fuel for the development of new energy sources. One of the priorities of Pertamina is to support the government of Indonesia to secure and manage energy resources to cater to the rising demand of people, as well as creating job and employment opportunities. Celanese and Pertamina will work together to define potential supply arrangements, production locations and distribution strategies.

The U.S. government and major U.S.-based companies are also extending their support for the development of Indonesia. Celanese remains encouraged by the country’s stand in expanding its economic and business interests in Indonesia to promote infrastructure development and investments.

Last month, Celanese released its second quarter 2012 results. The company’s adjusted earnings (excluding one-time charges) of $1.47 per share were down from $1.66 a year ago. However, it marked the second highest quarterly adjusted earnings in the company’s history. Earnings also exceeded the Zacks Consensus Estimate of $1.40 per share. Profit, as reported, rose 3.4% year over year to $210 million or $1.31 per share.

Sales for the quarter were $1,675 million, down 4% year over year and missing the Zacks Consensus Estimate of $1,765 million. The decline was due to lower pricing in the company’s acetyl intermediates business, a weakened European economy and slower growth in Asia.

Celanese expects challenging economic conditions to prevail in Europe and the current growth rates in Asia to continue for the rest of 2012. As such, the company expects earnings per share in the second half of 2012 to be slightly lower than the first half of the year.

Celanese, which competes with BASF SE (BASFY) and Methanex Corporation (MEOH - Analyst Report), currently retains a Zacks #3 Rank, reflecting a short-term (1 to 3 months) Hold rating. We have a long-term (more than 6 months) Neutral recommendation on the stock.

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