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PGN to invest $1b in LNG receiving terminals

State gas distributor PT Perusahaan Gas Negara plans to allocate US$ 1 billion to build Liquefied Natural Gas (LNG) receiving terminals in West Java and North Sumatra, an official revealed Wednesday

Nani Afrida (The Jakarta Post)
Jakarta
Thu, November 26, 2009

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PGN to invest $1b in LNG receiving terminals

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tate gas distributor PT Perusahaan Gas Negara plans to allocate US$ 1 billion to build Liquefied Natural Gas (LNG) receiving terminals in West Java and North Sumatra, an official revealed Wednesday.

“The investment in the terminals is about $100 million up to $150 million per unit [with some multiple units],” PGN president director Hendi P Santoso told reporters during a hearing between PGN and the House of Representatives.

The company acknowledged that it was still seeking some loans from  banks to finance the terminals.
“We probably will find 30 percent of the budget needed from the internal cash flow, with the rest from bank loans,” PGN finance director Riza Pahlevi Thabrani said.

It was reported that the company targeted to deliver a maximum of 400 million cubic feet per day in additional gas supply from the West Java LNG terminal, and up to 150 million cubic feet per day from the North Sumatra one.

For the West Java project, the company had established a partnership with state oil and gas producer PT Pertamina, and state power utility PT PLN.

Meanwhile, for the North Sumatra project, PGN would be fully in charge of the construction and operation of the project.

The company expected the projects to start operations in 2012.

PGN faces problems concerning the planned terminal in West Java because there is still uncertainty on  later gas supply for the terminal.

“Until today, there has yet to be an agreement with the Total Indonesie gas company, which takes gas from the Mahakam block in East Kalimantan,” Hendi said.

PGN is planning to have a gas contract with Total Indonesie for 10 years, starting in 2012.

But Total Indonesie will have concluded its Mahakam block business contract with the government in 2017, leaving PGN in uncertainty on the continuing supply of gas for the West Java planned terminal.

Total E&P Indonesie, the local subsidiary of France’s Total S.A , is currently the biggest gas producer in Indonesia.

“Total needs to assure us as to whether the company can extend its business [further forward] at the Mahakam block. This is the reason why we cannot be sure to get [continuity of] gas supply for the West Java terminal,” Hendi said.

Concerning the North Sumatra project, PGN has secured its forward gas supply from the Tangguh plant in Papua

LNG is natural gas (predominantly methane) that has been converted temporarily to liquid form for ease of storage or transport and converted back to gas at its destination.

PGN currently operates gas pipelines in Java and Sumatra.

This year, PGN initially expected to sell 700 million to 800 million cubic feet per day (MMSCFD) of gas, up from 578 MMSCFD sold last year.

As of the first half of the year, it has sold 756 MMSCFD of gas.

The rise in the volume of gas sold boosted the company’s net profits, which soared by 135 percent to
Rp 3.19 trillion.

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