Pertamina to import LNG to meet rising gas demand in local market
State-run oil and gas firm PT Pertamina says that it plans to import liquefied natural gas (LNG) from Africa and Australia starting 2013 to cope with growing demand in the domestic market.
The company’s vice president for commercial and business development, Djohardi Angga Kusumah, said Pertamina would take 1 million ton per annum (mtpa) of LNG from each country. The total of 2 mtpa of LNG would be delivered to the West Java floating storage and regasification unit (FSRU) until other LNG receiving terminals had been built, he added.
“In an African country, there is around 2.7 mtpa of LNG that has not been sold. However, we will only take 1 mtpa from Australia. We are also negotiating to import 1 mtpa,” he told reporters in Jakarta over the weekend.
However, he declined to name the African country or the Australian supplier because the deals were still about to be finalized. He said if the negotiations could be concluded to formal deals, the imports would begin next year for a period of 10 years.
Djohardi affirmed that Pertamina would still import the LNG whether or not the company’s plan to set up another FSRU off Central Java could be executed.
“From 2013 to 2016, the imported gas will be used to fulfill domestic demand, but starting in 2017, we will let our allocation be taken by other buyers as I predict we will have supply from domestic gas fields,” he said.
He continued saying that in 2017, the country would receive additional LNG supply from the expansion of the Bontang LNG plant in East Kalimantan and the operation of the third production facility, usually called a train, at the Tangguh LNG plant in Papua.
“We only utilize imported LNG to fulfill gas demand which cannot be fulfilled by domestic sources. When there is available domestic sources, other buyers can take our allocation from both Africa and Australia,” Djohardi said.
According to Pertamina’s calculations, the gas demand from non-fertilizer industries will hit 1,178 million standard cubic feet per day (mmscfd) in 2014, 1,580 mmscfd in 2018 and 1,797 mmscfd in 2020.
The data recorded that the consumption was only 818 mmscfd in 2008
The company’s observation shows that there are several constraints in the country’s efforts to catch up with the growing gas demand. The constraints are lack of infrastructure to connect gas producing regions such as Kalimantan and Sulawesi as opposed to consumers in Java.
The other constraint is the low price in the upstream sector that hinders the development of gas fields, which is important for the provision of a more sustainable supply of gas.
Djohardi also reported that Pertamina Gas (Pertagas), subsidiary of Pertamina, and Indonesia Power, subsidiary of state power utility PT Perusahaan Listrik Negara (PLN), had established a joint venture company named PT Pertadaya Gas to build and operate seven small-scale LNG terminals in eastern Indonesia – Maras, Batakan, Tanjung Batu, Likupang, Halmahera and Pesanggaran.
The seven LNG terminals are predicted to cost around US$270 million, with the first terminal expected to begin operations in early 2014 and the last in late 2015.