Mini-LNG for East Indonesia

The development of miniature liquefied natural gas terminals is the best way to meet growing energy demand from Eastern Indonesia, state energy firm Pertamina says, adding that building an extensive pipeline network, like the one in densely populated Java, is not commercially viable.

Energy infrastructure is poor in Eastern Indonesia despite it being a location for oil and gas developments, including the Tangguh LNG plant in West Papua and Masela gas block in Maluku.

Yenni Andayani, vice president for strategic planning and business development at Pertamina’s gas directorate, said energy needs from the east are low compared to more-developed areas.

Energy costs, meanwhile, can be five times higher than in other regions due to most of the power plants there being fueled by diesel, she added.

Pertamina estimated that peak demand for natural gas in Eastern Indonesia could reach 30 million metric standard cubic feet per day, eclipsing available supply.

“Small-scale LNG [terminals] is the most strategic solution to address the supply and demand situation as well the geographical problem in the region,” Yenni said.

She claimed a fully fledged mini-LNG development in the region would enable the government to reduce electricity subsidy costs by about $5.4 billion a year, while ease of access to electricity will likely have significant economic benefits.

Pertamina and state electricity firm Perusahaan Listrik Negara have created a joint venture named Perta Daya Gas that plans to build mini-LNG terminals in seven locations across Eastern Indonesia. Some of the facilities are expected to go on stream as early as next year.

“The total capacity [of those LNG terminals] will be around 1 million [metric] tons a year,” Yenny added.