PLN, Pertamina to build gas infrastructure in eastern Indonesia

Electricity utility PT PLN and oil and gas firm PT Pertamina announced Thursday that they would collaborate to build a gas transportation system.

It is expected to include eight liquefied natural gas (LNG) receiving terminals, designed to support PLN's operations in eastern Indonesia.

PLN president director Dahlan Iskan said that the planned infrastructure might reduce his company's expenditures to buy oil-based fuels by Rp 874 billion (US$100,17 million) per year, which ultimately would lead to a decrease in electricity subsidy.

“The idea resulted from Pertamina after learning that our company encounters difficulties in controlling soaring production costs in peak hours due to the excessive use of oil-based fuels,” he told reporters at the signing of the cooperation's MoU in Jakarta.

He added that converting the utilization of oil-based fuels to gas-based ones was not an easy job, particularly in the eastern part of the country, due to a lack of infrastructure for transport and to receive gas.

“With this cooperation, those problems will be solved,” Dahlan said.

Pertamina president director Karen Agustiawan voiced her expectation that the planned projects would help the electricity company ensure gas supply for its power plants in eastern Indonesia and improve its operational efficiency.

The development of the eight receiving terminals are to be divided into three phases, she explained. In the first phase, four terminals will be built in Samarinda and Balikpapan in East Kalimantan, Pasanggaran in Bali, and Kendari in Southeast Sulawesi.

“We expect those terminals to begin operating in 2012,” she said.

In the second phase, Karen reported, two terminals would be set up in Mataram in West Nusa Tenggara and Banjarmasin in South Kalimantan, whose operations were estimated to kick off as late as 2013.

“The remaining two terminals will be constructed in Gorontalo [North Sulawesi] and Halmahera [North Maluku]. They will start operating in 2015,” she said.

Pertamina data shows that eight LNG receiving terminals will have a total capacity of 177 million standard cubic feet per day (mmscfd). The terminals are the most suitable gas transportation systems to be installed in eastern Indonesia. Pipeline networks like those in the country's west are not available there.