Tapping a gas gusher in Indonesia

By Bill Guerin, Asia Times

JAKARTA – After a series of environmental, funding and supply contract problems, surging regional demand has given new impetus to Indonesia's US$6.5 billion Tangguh liquefied natural gas (LNG) project, which with 14 trillion cubic feet of proven reserves represents one of the largest gas fields in all Asia.

Energy Minister Purnomo Yusgiantoro said last week that the first LNG deliveries from the plant are now expected to start by the end of next year. The gas will help China, the second biggest investor in the ambitious project, to meet its surging energy demand while at the same time tap a valuable new fuel source to power Indonesia’s domestic economy.

The announcement comes amid surging global LNG prices, which have more than doubled over the past three years. The initial output of the two planned LNG production lines, or trains, as they are known in industry parlance, will be a combined 7.6 million metric tons per year, an output that has been fully contracted for the next 25 years.

The gas will flow from two unmanned offshore production platforms through sub-sea pipelines to an LNG processing facility on the Papua mainland. From there, super-cooled gas will be exported from a tanker terminal directly to buyers, including a contracted 2.6 million tons to an LNG terminal on the coast of the southeastern Chinese province of Fujian. Another 3.7 million tons is scheduled to be sent to Sempra Energy's Baja California terminal on the western coast of Mexico as well as 1.1 million metric tons to South Korea to supply steelmaker Posco and SK Power.

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