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20 January 2010

Indonesia’s state energy firm to build $200m LNG terminal in East Java

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Indonesia’s state oil and gas company PT Pertamina plans to build another liquefied natural gas (LNG) receiving terminal in East Java with a required investment of about $200 million, president director Karen Agustiawan was quoted as telling the Jakarta Post Monday.

“The terminal will be a floating LNG terminal with a [receiving] capacity of about 500 million cubic feet,” said Karen, adding that Pertamina would build the terminal alone.

The terminal is part of the government’s program to provide gas infrastructure to anticipate higher domestic demand, especially from the electricity sector.

Aside from the East Java terminal, Pertamina is also in talks with state gas distributor PT PGN to build an LNG terminal located in West Java.

PGN’s president director Hendi P Santoso said that Pertamina would hold a 60 percent stake in the proposed project.  

Karen said the West Java LNG terminal would have the same capacity and need the same investment as that proposed for East Java. She set an ambitious timetable for completion of the two projects.

“We expect the projects to be completed in September 2011,” she said.

Upstream oil and gas regulator BPMigas’s deputy for operations Budi Indianto said the terminals would receive LNG both from domestic and overseas producers.

“The LNG will be supplied from Qatar , Tangguh [LNG project], and East Kalimantan [Bontang LNG].”

The Tangguh LNG plant located in Bintuni Bay, West Papua has actually already found buyers. But a contract to supply up to 3.7 million tons of LNG per year to the Sempra LNG Terminal in Baja California, Mexico is a flexible contract, meaning that the producer may divert up to 50 percent of designated LNG to Sempra to other markets.

Domestic demand for gas has increased significantly as state power utility firm PT PLN slowly converts its oil-fueled power plants to gas-fueled power plants.

Last August, PLN said that the company would need 2,233 million standard cubic feet of gas per day (mmscfd) in 2010, while the available supply is about 900 mmscfd.

By 2012, PLN predicts its gas demand will be at 2,474 mmscfd, while the domestic supply may only be 1,781 mmscfd.


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