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PGN Too Soon Receive First LNG Delivery to Lampung FSRU

A vessel carrying the first cargo of liquefied natural gas (LNG) to floating storage in Lampung set sail on Saturday, marking the first step for state gas distributor PT Perusahaan Gas Negara (PGN) in its efforts to secure gas supply in Sumatra and West Java to meet domestic demand.

The LNG cargo, carrying 3.32 million mmbtu (million British thermal unit) volume, embarked from the Tangguh field in Papua, according to the upstream oil and gas regulatory task force (SKKMigas).

“This is part of the oil and gas upstream sector’s commitment to meet domestic gas demand,” SKKMigas acting chief Johannes Widjonarko said on Sunday.

“From the Lampung FSRU [floating storage and regasification unit], the gas will be supplied to the electricity sector and industry in West Java, which are connected through the South Sumatra West Java pipeline. The Lampung FSRU will also supply to Sumatra,” he added.

The first delivery is part of a planned delivery of 5 cargoes this year, according to the regulatory body, which approved the gas allocation.

Indonesia is estimated to have gas resources of around 104 trillion standard cubic feet (tscf) in proven and 48 tscf in potential gas reserves, making it the 13th-largest owner of proven natural gas reserves in the world and the second-biggest in the Asia-Pacific region after China, according to the International Energy Agency. However, most of the gas is sent abroad, as poor domestic infrastructure has hindered higher gas absorption.

Development of the Lampung FSRU, which is the second in the country after the West Java FSRU, is expected to increase domestic consumption.

Vice president of corporate communications at PT Perusahaan Gas Negara, the parent company of PGN LNG Indonesia, Ridha Ababil, said the vessel, which departed last Saturday, was scheduled to arrive at the Lampung FSRU Thursday this week.

“Given the delivery, we will be able to commence operations at the Lampung FSRU this July,” he said.

Following this year’s planned deliveries, SKK Migas has allocated for the Tangguh LNG to send 14 cargoes to the Lampung FSRU next year.

However, Ridha said PGN was still trying to ensure that all the allocated cargoes would be absorbed next year.

“In gas infrastructure, early years’ absorption will be lower from its full capacity as we need time to also develop the market. Developing the market usually takes three to four years,” Ridha said.

PGN’s Lampung FSRU has a storage capacity of 170,000 cubic meters of LNG and a capacity to receive 2 million tons of LNG per year. Its distribution capacity is 240 million standard cubic feet per day (mmscfd).

The LNG price for Lampung has not been revealed, particularly because Tangguh LNG and PGN have not signed a definitive sale and purchase agreement, according to Ridha.

The government has been calling for higher domestic consumption of gas as part of an attempt to reduce the country’s dependency on oil imports.

SKKMigas is targeting to see 54 percent of total gas production to be delivered to the domestic market this year.

PGN’s delivery to the Lampung FSRU is the second delivery from Tangguh to the domestic market following deliveries to fertilizer firm PT Pupuk Iskandar Muda.

The fertilizer company is planning to absorb 2 cargoes this year from a planned allocation of 4 cargoes.

Source: The Jakarta Post, July 7, 2014

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