B

adak NGL, the country'€™s major liquefied natural gas (LNG) plant, is projecting declining cargo outputs for the next few years following insufficient supply from depleted gas fields.

The company'€™s president director Salis Aprilian said on Thursday the firm estimated production of 152 LNG cargoes this year, down from 182 cargoes last year.

'€œThis is because of a predicted decline in output from Mahakam block, which will be quite significant. We will see additional input from Bangka field, but [not by much],'€ Salis said.

Badak NGL, located in Bontang in East Kalimantan, processes LNG using gas from various blocks, including the Mahakam block operated by Total E&P Indonesie, the East Kalimantan block operated by Chevron and the Sanga-sanga block operated by Vico. Additional production of around 100 million standard cubic feet per day (mmscfd) is expected from Bangka, part of the Indonesia Deepwater Development (IDD) project by Chevron Indonesia, this September, Salis said.

Badak NGL currently runs four LNG trains to support its operation, out of a total of eight trains. The company is expecting to shut down one more train in June or July this year due to declining supply, bringing total plant operations down to only three units.

'€œWe are also facing uncertainty as the operation of Mahakam block will change hands from Total to Pertamina. We hope Pertamina can improve the block'€™s production so that we can switch on more LNG trains,'€ Salis said.

Unless the production from Mahakam is increased or at least maintained, Badak will need to shut down another train. Based on the company'€™s projections, it is likely to operate with only two LNG trains by 2019.

In 2001 Badak'€™s eight LNG trains reached peak production and that was maintained for two years. The company then started to reduce the number of active trains following declining supply from nearby fields. In a worst case scenario, the company would need to consider modifying its facilities due to supply shortage.

The options include creating a re-gasification unit, as has been done at the Arun LNG plant in Aceh, now the Arun re-gasification terminal; turning into a distribution hub for sending LNG or LPG to the eastern part of Indonesia; or changing course to receive and process CNG (compressed natural gas) instead of LNG. Given the lifetime of gas fields supplying the plant, Badak NGL is likely to need to modify in 2034, Salis said.

Indonesia has long been known as a major player in the global LNG market due to the significant potential of its gas resources. LNG production, which now mostly comes from the Bontang plant and the Tangguh plant in Papua, is mostly sent abroad. The government has been calling for higher utilization of gas for domestic markets as part of an attempt to reduce dependency on petroleum products. However, many fields have been depleted due to exploitation in the past.

Domestic demand is expected to continue rising following the introduction of new gas distribution infrastructure and increasing demand for power generation. While demand increases, the country is facing a possible lack of supply due to a number of delayed new gas projects.

'€œIn case of on-time development, the spare capacity of domestic LNG could meet growing LNG demand. But, project delays and corporate dynamics could create a need for international contributions,'€ said Edi Saputra of Wood Mackenzie.