Pertamina plans to use Arun plant as LNG terminal

The Jakarta Post – State oil and gas firm PT Pertamina says it plans to convert the Arun liquefied natural gas (LNG) plant in Aceh into a LNG receiving terminal when the plant’s gas reserves run out in 2014.

The company’s spokesperson, Mochamad Harun, told The Jakarta Post in a text message on Wednesday that the conversion would cost the company US$80 million, which would come from its own capital.

He said the receiving terminal would take 20 months to complete.

However, the company’s president director Karen Agustiawan said recently that Pertamina was still waiting to hold further discussions with the government about the post-2014 future of the plant.

She said that Pase Energy, a regional enterprise in Aceh, had proposed to play a role in the proposed receiving terminal project. However, she said, the final decision lay with the government.

“We’re fully open to all possibilities, including the regional company’s involvement in the operation of the receiving terminal,” she told reporters after an event at the Energy and Mineral Resources Ministry in Jakarta on Friday last week.

“The capacity of the receiving terminal is around 100 million standard cubic feet per day [mmscfd]. The gas may be imported from Qatar and Australia.”

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

Currently, Pertamina holds a 55 percent stake in Arun, ExxonMobil owns 30 percent and a consortium of Japanese buyers owns 15 percent.

Arun, which is the oldest LNG plant in the country, saw its production peak in 1994, when the company exported 224 cargoes worth of gas, or 16.2 million tons.

Reuters reported that the plant’s 2011 output might fall 31 percent to 29 cargoes, from 38 cargoes last year. Of that amount, 26 cargoes will be sold to overseas buyers and the rest to state fertilizer producer PT Pupuk Iskandar Muda.

In addition to Arun, Indonesia has two other LNG plants: One in Bontang, East Kalimantan, and one in Tangguh, Papua.

Indonesia is the third-biggest LNG exporter in the world, after Qatar and Malaysia.

However, Indonesia’s total LNG production is well short of domestic demand.

To mitigate the problem, the country plans to build three floating storage and re-gasification units (FSRU) in Belawan, North Sumatra, West Java and Central Java.

The Belawan and West Java storage facilities are expected to start operating in 2012, with respective capacities of 1.5 million tons per annum and 3.7 mtpa.