S

tate gas distributor PT Perusahaan Gas Negara (PGN) will focus more on the development of Liquefied Natural Gas (LNG) business in the future, because transporting gas through pipelines would not be a cost-effective for the majority of Indonesia's gas reserves.

PGN president director Hendi Prio Santoso said Monday the company would make LNG business a priority, since most of Indonesia's potential gas supply would be sourced from areas outside Java.

"We are aware that the gas reserves are dwindling and the existing potential sources are located in Masela *in the Timor Sea*, Tangguh *Papua* and the Deep Sea areas *East Kalimantan*," he said.

Looking at this prospect, Hendi said it would be unwise to build pipelines to transport gas to customers, because it would require a huge amount of investment.

PGN currently operates gas pipelines in Java and Sumatra.

LNG technology only requires the transportation of gas through ships, where the gas would be frozen before the shipment and then liquefied after it reaches its destination.

The company is now in the process of developing two LNG receiving terminals in North Sumatra and West Java, as part of the company's LNG business development.

For the West Java project, the company had established a partnership with state oil and gas producer PT Pertamina, and state electricity firm PT PLN.

Meanwhile, for the North Sumatra project, PGN would be fully in charge of the construction and operation of the project.

However, Hendi refused to elaborate on the each company's interest in the West Java project, or on the sums of the investment.

He only said that both projects were targeted to begin operation by the second half of 2012.

The company targets to get a maximum of 400 million cubic feet per day in additional gas supply from the West Java LNG terminal, while for North Sumatra it will deliver up to 150 million cubic feet per day.

This extra supply is expected to boost PGN's future earnings.

During the first half, PGN gas sales volume rose 37 percent to 756 million cubic feet per day.

The rise in gas sales volume boosted the company's net profits, which soared by 135 percent to Rp 3.19 trillion (US$319 million). PGN expects its sales volume to reach between 760 and 800 million cubic feet per day , by the end of this year.