S

tate-backed gas distributor PT Perusahaan Gas Negara (PGN) says the construction of the much-anticipated floating storage and regasification unit (FSRU) in Lampung province in southern Sumatra will be complete by mid-2014.

PGN president director Hendi Prio Santoso said on Thursday that the vessel’s keel had been laid earlier this week at the shipyard of the world’s top shipbuilder, Hyundai Heavy Industries in South Korea.

“The construction of the Lampung FSRU is set to be completed in mid-2014. With the operation of the new unit the gas supply for industry and domestic use will increase in Lampung and West Java,” he said in a statement. The Lampung FSRU will have a distribution capacity of 240 million standard cubic feet per day (mmscfd) of liquefied natural gas (LNG).

PGN, whose principal business is the distribution and transmission of natural gas to industrial, commercial and domestic users, expects to complete the mooring system, off-take station and onshore-receiving facilities this year.

In addition, PGN, whose gas suppliers include fellow state-owned, oil and gas firm PT Pertamina, US-based ConocoPhillips and Australian Santos, is also expected to build a 21-kilometer pipeline system to connect the Labuhan Maringgai port in East Lampung to the location of the FSRU offshore Lampung.

The new Lampung FSRU, which will cost the firm around US$300 million, will have a storage capacity of 170,000 cubic meters of LNG and a capacity to receive 2 million tons of LNG per year.

PGN have selected Norway-based Hoegh, an LNG transportation and services company, to operate the Lampung FSRU under a 20-year contract.

The Lampung terminal is PGN’s second FSRU project, the first being the West Java FSRU, which began operations in 2012, through the gas distributor’s subsidiary PT Nusantara Regas. PGN owns a 40 percent stake in Nusantara Regas with the remainder of the shares belonging to Pertamina.

Commenting on several big gas projects this year supported by the Indonesian government amid the soaring demand for gas in line with rapid industrial and energy-use expansion, Hendi said the firm supported the government’s program “100 percent”.

He said the firm supported the government’s plan to increase the domestic allocation of natural gas, adding that there would be a need for stakeholders to ensure the gas supply and infrastructure to support the program.

Indonesia is currently focusing on gas development as it has become a net importer of both crude oil and refined products following the decline in the nation’s crude oil output due to aging oil fields and the failure to unearth new hydrocarbon reserves.

PGN revealed on Thursday that it had 89,000 gas subscribers as of 2012. The firm distributed 806 mmscfd of natural gas in 2012, an increase from the 795 mmscfd it distributed in the same period in 2011.

At least 90 percent of the gas volume PGN distributed has been channeled to industry.

PGN’s shares, traded under “PGAS”, closed at Rp 4,800 (50 US cents) on Thursday up from Rp 4,775 the day before.