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tate oil and gas firm PT Pertamina estimates that if the Arun liquefied natural gas (LNG) plant in Aceh is converted into an LNG receiving terminal, the government will receive an additional revenue of US$13.55 million per year.

Pertamina says it would invest around $73 million for capital expenditure and $4 million for operational expenditure to expand the storage capacity of the plant from the current 200 million standard cubic feet per day (mmscfd) to 320 mmscfd.

“The front-end engineering design [FEED] for the conversion project has been completed in June. We hope we can conduct the pre-qualification tender in January 2012, that way the receiving terminal can begin commercial operations in January 2013,” Pertamina spokesman Mochamad Harun said on Friday.

The company, through its subsidiary PT Pertamina Gas (Pertagas), had also prepared a plan to install a 350-kilometer pipeline connecting the planned receiving terminal and industries in Medan and the Belawan gas-fired power plant, both in North Sumatra, he added.

“The pipeline will channel 120 mmscfd of gas to Medan and Belawan. The maximum gas demand from the two places is only 120 mmscfd comprising 60 mmscfd for Belawan and 60 for industries,” Harun said.

The pipeline construction is scheduled to start in January 2012 for land acquisition and tenders for engineering, procurement and construction (EPC).

Pertamina expects to kick off the construction of the pipeline in July 2012 and begin commercial operations in December 2013.

Currently, Pertamina holds a 55 percent stake in the Arun LNG plant, while US oil and gas company ExxonMobil and a consortium of Japanese buyers have 30 percent and 15 percent of stakes, respectively.

Gas in Aceh was discovered by Mobil Oil Indonesia (which is now ExxonMobil Indonesia) in 1971. After studies, the government and its partners then set up an LNG plant in Arun and began exporting LNG to Japan in 1978.

Arun, the oldest LNG plant in the country, saw its production peak in 1994 when the company exported 224 cargoes worth of gas, equal to 16.2 million tons. The gas reserves will no longer be economical to convert into LNG starting in 2014.

This year, according to upstream oil and gas regulator BPMigas data, the plant will deliver 25 cargoes of gas which consists of 2 cargoes to Japan and 23 cargoes to South Korea. Last year, Arun exported 33 cargoes to Korea only.

Pertamina says the revitalization project will bring many benefits to industries around the plant. State fertilizer maker PT Pupuk Iskandar Muda can boost urea production to 1.2 million tons if it gets 110 mmscfd of gas supply while PT ASEAN Aceh Fertilizer can ramp up production to 730,000 tons with 60 mmscfd of gas.

“[Paper maker] PT Kertas Kraft Aceh can also operate in its full production capacity of 135,000 tons per year if it gets 15 mmscfd of gas. If all goes as planned, those firms can absorb 4,357 workers,” Harun said.

In addition to Arun, Indonesia has two other LNG plants in Bontang, East Kalimantan, and in Tangguh, Papua. Indonesia is the third-biggest LNG exporter in the world, after Qatar and Malaysia.