State gas distributor PT Perusahaan Gas Negara (PGN) will acquire gas fields from existing operators and import Liquefied Natural Gas (LNG) to meet surging demand for gas, a senior official has said.
PGN president director Hendi Prio Santoso said in Jakarta Thursday the company would allocate about Rp 3.4 trillion (US$363.8 million) from its budget to purchase several gas blocks to secure long-term gas supply for the company’s receiving LNG terminal in North Sumatra.
Hendi said that PGN would cooperate with strategic partners to operate the gas blocks which would supply a floating LNG receiving terminal to be built by the company near Medan. He said negotiations were now underway for the purchase of several gas blocks in Sumatra.
“By operating our own gas blocks, we will no longer rely on other gas producers to meet the
demand,” he said.
Hendi said this following the signing of a memorandum of understanding (MoU) with state oil and gas Pertamina for the establishment of a floating LNG receiving terminal off West Java.
Under the MoU, PGN and Pertamina agreed to jointly build the floating LNG terminal to meet the surge in the gas demand in West Java and the greater Jakarta area especially given increased demand from state electricity company PLN, he said.
Pertamina and PGN will hold 60 percent and 40 percent shares, respectively, in the joint LNG receiving facility which will have a storage capacity of 1.5 million tons.
The construction of the LNG facility, which will cost about Rp 2 trillion (about $214 million), will commence this year. It is expected to start commercial operation by the end of next year.
PGN commercial director Michael Baskoro said that the company would also import about 2 million tons of LNG from Qatar to supply the West Java LNG receiving terminal.
“PGN and Pertamina have discussed the import plan with a Qatari company. We also plan to import some LNG for the receiving terminal in North Sumatra,” Michael said.
The BP Plc-led Tangguh project in Papua may additionally supply 1.5 million tons to the North Sumatra facility, he added.
The LNG importation, the first ever made by Indonesian companies, would be needed because the country’s LNG producers and production facilities such as the Arun LNG plant in Aceh, the Bontang LNG plant in East Kalimantan and the Tangguh LNG plant in Papua export most of their production under long-term contracts.
He acknowledged however that PGN had also signed a contract to buy 11.75 million tons of LNG from the Bontang plant for 11 years to supply the West Java LNG receiving terminal.
Indonesia’s gas consumption surged 11.5 percent in 2008, outstripping the rate of growth in gas production which reached only 2.7 percent. The country’s LNG production has declined sharply in recent years due to a drop in the production of the Arun LNG plant.
According to data provided by BP Plc, LNG production dropped to 19.6 million tons in 2008 from its peak of 29 million tons in 1999. Most of the Indonesian LNG production is exported.
PGN, a blue chip firm on the local stock market, booked Rp 5 trillion in net profits last year, a steep jump from Rp 633.86 billion in 2008 thanks to a surge in gas sales and foreign exchange gains.
