Pertamina, PGN join hands to supply LNG in central RI
PLN needs more LNG from Pertamina and PGN Pertamina and PGN will develop various LNG infrastructures
State-owned energy companies PT Perusahaan Gas Negara (PGN) and Pertamina are set to join forces to supply liquefied natural gas (LNG) to various power plants operated by state electricity firm PLN in the central part of Indonesia.
In 2015, PLN started the tender process for the development of LNG infrastructures and the procurement of 230 million standard cubic feet per day (MMSCFD) of LNG for its 32 gas-fueled power plants in Kalimantan, Sulawesi and East Nusa Tenggara (NTT) islands. Those facilities were expected to have a total capacity of 2,800 megawatts (MW).
However, PLN eventually delayed the tender following its decision to make several adjustments such as excluding power plants in Bali, Gorontalo and Pontianak to make the project more efficient. As a result, the total supply of LNG sought by PLN was reduced to 200 MMSCFD.
PLN has awarded the tender to PGN and Pertamina, which will establish a consortium to develop various LNG infrastructures, including storage and regasification facilities, under the build-operate-transfer (BOT) scheme and procure small-to-medium carriers to transport the LNG.
“PGN and Pertamina have discussed the investment needed for the project. Now we just have to wait for the evaluation from PLN,” PGN president director Jobi Triananda Hasjim said recently without disclosing the investment figure.
“We are still considering whether to buy new LNG carriers or utilize the existing ones because the investment needed for such facilities is not cheap. It is also possible for us to team up with private investors to procure the carriers.”
Jobi said central and east Indonesia were interesting markets for PGN because, as of today, people in those regions still relied heavily on liquefied petroleum gas (LPG) that was more expensive compared to LNG.
However, PGN can only penetrate those markets if there is an “anchor buyer” like PLN that will ensure a long-term massive demand for LNG.
That is why PGN has submitted a number of tender bids for contracts with PLN, including for the development of LNG infrastructure in Bangka Belitung, Pontianak and Nias to supply LNG to six power plants in those three regions with capacities ranging from 25 MW to 100 MW each.
“For instance, when we are able to supply LNG to Pontianak [in West Kalimantan], the demand for industrial gas in the region will also increase, so will the demand for gas from commercial and household sectors,” Jobi said.
Pertamina also signed on Thursday a gas sales agreement with PLN to supply LNG for the latter’s gas-fueled power plants in Sambera, East Kalimantan, with a capacity of 2 x 20 MW.
The agreement will pave the way for Pertamina to supply 7.9 MMSCFD of LNG within five years starting from April 2018. Therefore, the firm will prepare the regasification facilities and at least 20 ISO shipping containers to transport the LNG.
“This kind of LNG transportation system will help us penetrate remote areas that have yet to be reached by pipelines, as well as support the government’s 35,000 MW electricity program,” Pertamina gas director Yenni Andayani said.
Furthermore, when the industrial and commercial markets as well as the infrastructure have been developed in remote regions, it will be easier for PGN and Pertamina to build more city gas networks as mandated by the government.