Pertamina, PLN to build eight LNG terminals

State electricity company PT PLN intends to team up with state oil and gas firm PT Pertamina to build a gas distribution network comprising eight liquefied natural gas (LNG) receiving terminals in eastern Indonesia.

PLN president director Dahlan Iskan said in Jakarta on Thursday that the development of the gas infrastructure facilities was part of
the company’s plan to reduce the nation’s reliance on oil for power generation.

He said the new terminals should reduce the company’s spending on oil-based fuel by Rp 874 billion (US$100.2 million) a year. If the plan is fully implemented, it will help reduce the government’s electricity subsidy, he added.

“The idea came from Pertamina after it learned that our company was having a hard time controlling soaring production costs during peak hours due to the excessive use of oil-based fuels,” he told reporters at the signing of a memorandum of understanding (MoU) on the plan in Jakarta.

He said shifting from oil-based fuels to gas was not an easy job, particularly in the eastern areas of the country, due to a lack of infrastructure available to transport and hold gas.

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

Pertamina president director Karen Agustiawan said he hoped 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 would 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, she said.

“We expect that those terminals can 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. Those terminals would be up and running in 2013, she added.

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

Pertamina data showed that the eight LNG receiving terminals would have a combined total capacity of 177 million standard cubic feet per day (mmscfd). Gas terminals are more suited to the region, she said, as there were not enough gas pipelines to transport the gas in eastern Indonesia as there were in western Indonesia.

State-owned Enterprises Minister Mustafa Abubakar praised the two state companies for their efforts and commitment to continuously expanding electricity access for people living in less-developed areas such as in eastern Indonesia. He called on the two companies to “pay more attention” to such areas.

“The cooperation is very strategic. We know that it’ll be very costly to boost the utilization of oil-based fuels in those areas, so gas is the best solution we have currently,” he told the signing ceremony.

Minister Mustafa said wider access to electricity would spur development in the area as industries would have a greater accesses to power supply. “This is a very noble mission that we all should support.”

PLN and Pertamina will soon establish a joint venture company to operate the gas transportation system and LNG receiving terminals.