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Donggi-Senoro LNG plant looking for buyers

The Donggi-Senoro liquefied natural gas (DSLNG) plant is looking for buyers for a number of LNG cargoes that remain uncommitted this year, with the plant having started operation and having recently sent off its first cargo to a domestic buyer

Raras Cahyafitri (The Jakarta Post)
Banggai, Central Sulawesi
Tue, August 4, 2015

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Donggi-Senoro LNG plant looking for buyers

T

he Donggi-Senoro liquefied natural gas (DSLNG) plant is looking for buyers for a number of LNG cargoes that remain uncommitted this year, with the plant having started operation and having recently sent off its first cargo to a domestic buyer.

Eka Satria, the director of asset development at Medco EP '€” a subsidiary of PT Medco Energi International that holds a partial stake in the LNG plant '€” said only six cargoes had been committed by buyers out of the total estimated production of 15 to 16 cargoes by the year'€™s end.

'€œThese [uncommitted cargoes] are extra cargoes of the plant, which started producing earlier than our expectations. The committed cargoes will be delivered to our buyers in Japan and Korea starting from the fourth quarter, while the uncommitted ones will be released to the spot market,'€ Eka said.

He added that the uncommitted cargoes were only for this year as production next year and beyond had already found committed buyers, who are mostly based overseas.

On Sunday, the Donggi-Senoro plant shipped its first LNG cargo to the Arun regasification and receiving terminal in Aceh. The plant started receiving gas from the Senoro field in late April and made its first LNG drop on June 24.

The one-cargo shipment to Arun was part of four uncommitted cargoes that have been tagged by buyers. Eka did not mention the buyers of the other three cargoes sold on the spot market.

The US$2.8 billion Donggi-Senoro plant, which is part of the development of integrated upstream and downstream gas projects, now has up to six cargoes to offer to potential buyers.

It is the fourth LNG plant in Indonesia after Arun in Aceh '€” which has been transformed into a regasification and receiving terminal '€” Bontang in East Kalimantan and Tangguh in Papua.

The plant project involves PT Medco LNG Indonesia with an 11.1 percent stake, PT Pertamina Hulu Energi with 29 percent and Sulawesi LNG Development Ltd. '€” a joint venture of Mitsubishi Corporation and Korea Gas '€” with 59.9 percent.

It has a total capacity to produce 2.1 million tons of LNG per year, equal to between 33 to 35 shipments annually, according to DSLNG president director Gusrizal.

'€œWe will be in peak production in 2016. Under the current plan, the LNG will be delivered to Japan and Korea starting this year,'€ he said.

DSLNG has signed a long-term LNG sales and purchase agreement with Chubu Electric, Kyushu Electric and Korea Gas.

Indonesia, known as a major exporter of LNG, has been struggling to increase the utilization of its gas resources in the domestic market.

While several infrastructure projects to support gas deliveries are being worked on, the decline in the global oil price and slowing domestic economic growth have weakened the country'€™s domestic gas market and created uncertainty for several projects.

During the first semester of the year, the floating storage and regasification unit (FSRU) in Lampung, which is operated by state-run gas firm PT PGN, did not receive any gas supply due to zero demand from its buyers. The FSRU should have received LNG cargoes from the Tangguh plant, regasified them and then delivered the gas to customers, including state-owned electricity firm PLN and a number of industries in Lampung and
West Java.

However, PLN has turned down part of its commitment, citing that it expected slowing demand of gas to fuel power plants because power sales only grew slightly as industry players were hit by the weakening economy.

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