T

he world’s largest natural gas buyer, Korea Gas (Kogas) Corporation, is establishing a joint venture with Japan’s Mitsubishi Corporation to participate in the Donggi-Senoro liquefied natural gas (LNG) plant project in Central Sulawesi.

Mitsubishi said Monday that the two companies had agreed to set up a joint venture called PT Sulawesi LNG Development, which has a 60 percent stake in PT Donggi-Senoro LNG.

Mitsubishi will be the majority shareholder in the company, owning 75 percent of the joint venture, while Kogas will have the remaining 25 percent. As a result, Kogas will indirectly have a 15 percent stake in Donggi-Senoro.

“The involvement of Kogas has made this project the first joint LNG project between Indonesia, Japan and Korea and will open up a new era of cooperation in the energy sector for the three nations,” the firm said in a press release on its official web site.

Donggi-Senoro, also partly owned by PT Pertamina Energy Services and PT Medco LNG Indonesia, is estimated to produce around 2 million tons of LNG per year and 47,000 barrels of oil equivalents per day of condensate.

The US$2.8 billion (Rp 25.4 trillion) LNG plant is expected to begin operation and delivery by 2014.
The funds will be allocated for, among other things, financing land acquisition and infrastructure development.

Before the announcement of the final investment decision (FID) on Jan. 21, Mitsubishi had a 51
percent stake in Donggi-Senoro, while Pertamina and Medco shared the remaining 49 percent stake, owning 29 percent and 20 percent respectively.

However, the involvement of Kogas through Sulawesi LNG Development has caused several changes in Donggi-Senoro’s ownership composition. Medco decided to reduce its ownership to 11.1 percent and let the Japan-Korea joint venture acquire its 8.9 percent stake.

Lukman Mahfoedz, project director of Medco Energi Internasional, Medco LNG Indonesia’s parent company, said his company decided to release its 8.9 percent stake to Sulawesi LNG Development for several strategic reasons.

“This is the strategy of our company. We have seven major projects that all should run at the same time,” he said.

“This project marks our first involvement in the LNG business.”

Earlier reports said that Donggi-Senoro had secured LNG sales and purchase agreements (SPA) with Japan-based Chubu Electric Power and Kyushu Electric Power. Based on the agreements, Chubu and Kyushu will buy 1 million tons and 300,000 tons of LNG per year, respectively.

Kogas has also announced a plan to buy 700,000 tons of LNG from the company, a Bloomberg report said.

Donggi-Senoro is Indonesia’s fourth LNG project and the second involving the Mitsubishi Corporation after the Tangguh project in Papua.

“The Donggi-Senoro project should help Mitsubishi Corporation contribute further to Indonesia’s emerging economy,” the press release said.