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Jakarta Post

Pertamina pushes for switch from gasoline to LNG

  • Raras Cahyafitri

    The Jakarta Post

Jakarta   /   Thu, July 16, 2015   /  11:20 am

State-owned oil and gas giant Pertamina is pushing forward with its move to shift the country'€™s high usage of oil fuel toward gas, particularly liquefied natural gas (LNG), for the mining sector.

The company signed an LNG purchase and selling agreement on Tuesday with the contractors of Mahakam block, Total E&P Indonesia and Inpex. Under the agreement as many as 660 tons of LNG would be delivered this year for mining and commercial industries in East Kalimantan.

'€œWe are facing limited oil resources and therefore we need to switch to gas and also from fossil fuels to renewable resources,'€ Pertamina president director Dwi Soetjipto said.

As part of an attempt to support the plan, the company, through its affiliated firms, has established a filling station at its Bontang LNG plant with a 200 million standard cubic feet per day (mmscfd) capacity. The company has reportedly invested Rp 8 billion (US$599,274) in the filling station.

As demand is estimated to grow to 215 mmscfd by 2025, the company is also preparing to develop additional facilities. The planned new facilities '€” such as the expansion of the filling station and a loading dock at the LNG plant and LNG receiving terminal '€” are projected to cost US$156.4 million. Converting fuel to LNG in the Kalimantan market is expected to help the company save around $770 million per year and deliver a foreign exchange saving of up to $2.5 billion.

Indonesia, which is currently seeking to re-join the Organization of Petroleum Exporting Countries (OPEC), has been struggling to cope with declining oil production as fields have been depleted by exploitation over time. The situation is getting more critical as energy demand soars along with economic growth. To fill the gap between lack of supply from domestic oil output and rising demand, the country has to import a huge amount of crude oil and petroleum products.

Meanwhile, the country also has a significant amount of gas resources that have been sent abroad in form of LNG. The government has been calling for more domestic absorption of gas yet various issues, particularly infrastructure, have disrupted consumption by domestic buyers.

Moreover, as existing gas fields have been in contract with overseas buyers and new significant gas projects are delayed, Pertamina has been seeking supply from fields in other countries to anticipate demand in the near future.

The company'€™s vice president for LNG, Didik Sasongko Widi, estimated that Pertamina would need 6.5 million tons of LNG per year by 2020.

'€œOut of the total figure, we have secured 4 million tons, which includes deliveries from the US [Cheniere Energy] and Jangkrik [gas field in Kalimantan developed by ENI],'€ Didik said.

Along with the commencement of operations of the filling plant, Pertamina also launched the operation of seven other downstream oil and gas infrastructure facilities.

The projects include the relocation and increase in storage capacity of an LPG (liquefied petroleum gas) depot in Tanjung Priok in North Jakarta and a pipeline project for Avtur for delivering fuel from a terminal in Tanjung Perak to an airplane fuel depot at Juanda airport. There are also three facilities for liquefied gas for vehicles (LGV) stations in Surakarta, Central Java, and in Depok and Bogor, both in West Java.

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