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Pertamina granted 15-year extension at Arun LNG terminal
PT Perta Arun Gas (PAG) has extended its lease of the Arun liquefied natural gas (LNG) regasification terminal in Aceh for another 15 years in its effort to secure long-term gas distribution to industries and power plants in the region
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T Perta Arun Gas (PAG) has extended its lease of the Arun liquefied natural gas (LNG) regasification terminal in Aceh for another 15 years in its effort to secure long-term gas distribution to industries and power plants in the region.
PAG, an affiliate of state-owned energy giant Pertamina, has rented some assets at the Arun terminal, including one of six LNG trains in the complex, from the State Asset Management Agency (LMAN) since Dec. 31, 2014, initially for a period of three years.
On Monday, PAG officially made an addendum to its lease agreement with LMAN, paving the way for the former to extend its lease until 2032 with an annual payment of around Rp 50 billion (US$3.68 million), up slightly from the previous fee of Rp 48.6 billion.
“We have extended the lease as we need assurance for our long-term business development in the region,” PAG finance and general support director Isro Mukhidin told The Jakarta Post on Monday.
PAG currently processes LNG from a number of suppliers before delivering around 110 million standard cubic feet per day (mmscfd) of regasified gas to two gas-fueled power plants operated by state electricity firm PLN in Lhokseumawe, Aceh, and in Medan, North Sumatra.
The company also supplies 4 to 5 mmscfd of gas to industries in Medan, or one-third of the total industrial demand in the region.
“Energy demand in the region has gradually increased in the past three years, especially for PLN’s power plants. We believe the upward trend will continue in years to come, in line with the increasing electricity consumption,” Isro said.
Therefore, PAG is currently revitalizing several facilities, including LNG tanks and jetties, at its LNG hub at the Arun terminal with an investment of around Rp 30 billion. It plans to complete the revitalization by the third quarter of 2018.
Parent company Pertamina also plans to develop a new liquefied petroleum gas (LPG) tank at the Arun terminal with a capacity of 60,000 cubic meters per day to strengthen its LPG distribution in Aceh and North Sumatra. PAG will operate this facility once it is completed.
The Arun facility first commenced operations in October 1978 as an LNG production and export plant. It was initially operated by PT Arun NGL, in which Pertamina held the majority ownership of 55 percent.
However, the facility was eventually converted into a receiving and regasification terminal in 2014 as the gas source for LNG production had been depleted. PAG has since been the sole operator of the terminal.
Pertamina is also in the process of taking over the full operatorship of the Badak LNG plant in East Kalimantan, the country’s oldest LNG facility, inaugurated as it was in August 1977.
At present, the Badak facility is operated by PT Badak NGL, which will see its contract expire by the end of the year. Pertamina holds the majority stake of 55 percent in the company, while the rest is shared between Total E&P Indonesie, Vico Indonesia and Japan-Indonesia LNG Company (Jilco).
Isro said Pertamina was actually slated to sign an agreement with LMAN to fully operate the Badak plant on Monday, but the event was postponed for undisclosed reasons.
“Indeed, we are currently preparing to take over the full operatorship of the Badak plant. There is no doubt that we are ready to do that,” Pertamina gas director Yenni Andayani said in early November.
Data from PLN shows that Indonesia’s annual gas demand for power generation will increase to 2,805 billion British thermal units per day (bbtud) in 2026 from 1,548 bbtud in 2017.
