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Pertamina’s $1.96b Spending Plan to Boost LNG Output
Jakarta Globe | January 29, 2012

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Serigala-Berbulu-Domba
9:59pm Jan 29, 2012

It's extremely unfortunate that the ridiculously low-priced LNG supplied by the Tangguh LNG facility under LNG sales contracts with Chinese customers negotiated during Megawati's period as President couldn't be diverted into these domestic LNG receiving systems.

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State oil and gas firm Pertamina has settled on a plan to invest $1.96 billion from this year through 2014 to build gas-related infrastructure, it said in a statement on Friday.

The statement said the plan would support Indonesia’s master plan for economic development (MP3EI), which aims to diversify the nation’s energy consumption, boost downstream industries and help reduce the state’s oil fuel subsidy burden through greater use of natural gas, a cheaper alternative.

The bulk of the funding will go toward the construction of a floating storage regasification unit in Central Java and a 250-kilometer pipeline that will transmit the gas. The pipeline will run from the FSRU to Gresik, a city in East Java, Semarang, the capital of Central Java, and Cirebon, West Java.

The FSRU is expected to be operational by mid-2013, and the two projects will require a total of $1.15 billion in investment.

Pertamina also plans to build a $30 million FSRU in West Java and will convert a liquified natural gas refinery in Arun, Aceh province, into a receiving LNG terminal in 2014, at a cost of $380 million.

In a joint venture with state utility company Perusahaan Listrik Negara, Pertamina will also build smaller receiving terminals in a number of locations, including Tanjung Batu, Batakan, Balikpapan, Semberah, Bali, Pomala, Jeneponto, Tello, Minahasa and Halmahera.

Pertamina spokesman Mochamad Harun said the government had already green-lighted the investment plan, but he added that the company was still working to secure “assurance over LNG supply.”

Pertamina predicts that as the economy grows, Indonesia will need 10 million metric tons of LNG by 2014, which is equivalent to half of the nation’s current LNG export volume.

The company expects to deliver 6 million metric tons of LNG per annum from the Central Java and West FSRUs (3 million each), another 3 million from Arun and 1 million from the mini LNG receiving terminals.