PGN to invest $1b in LNG receiving terminals

Nani Afrida , The Jakarta Post, Jakarta | Wed, 11/25/2009 9:30 PM

State gas producer PT Perusahaan Gas Negara plans to allocate US$ 1 billion to build Liquefied Natural Gas (LNG) receiving terminals in West Java and North Sumatra, an official revealed Wednesday.

“The investment in the terminals is about $100 million up to $150 million per unit,” [with some multiple units] PGN president director Hendi P Santoso told reporters during a hearing between PGN and the House of Representatives.

The company acknowledged that it was still seeking some loans from banks to finance the terminals.

“We probably will find 30 percent of the budget needed from the internal cash flow, with the rest from bank loans,” PGN finance director Riza Pahlevi Thabrani said.

It was reported that the company targeted to deliver a maximum of 400 million cubic feet per day in additional gas supply from the West Java LNG terminal, and up to 150 million cubic feet per day from the North Sumatra one.

For the West Java project, the company had established a partnership with state oil and gas producer PT Pertamina, and state power utility PT PLN.

Meanwhile, for the North Sumatra project, PGN would be fully in charge of the construction and operation of the project.

The company expected the projects to start operations in 2012.

Sengkawang to invest US$136 mln in Indonesia`s energy sector

Jakarta (ANTARA News/Asia Pulse) - PT Energy Sengkawang plans to invest US$136 million to build power plants and gas pipeline in Sengkawang, the regency of Wajo, South Sulawesi.

Company president Paul Ivan Edwards said Energy Sengkawan will invest around US$120 million in a 60-megawatt gas fired power plant and a 60-MW coal fired power plant projects.

The gas fired power plant is expected to be operational this year and the coal fired power plant to follow in 2010, Edwards said.

The gas pipeline project to cost around US$16 million will transport gas from the Baru well to the power plant.

PGN to build 3 LNG receiving terminals at $1.67 billion

Jakarta (ANTARA News) - Indonesian gas distributor PT Perusahaan Gas Negara is planning to build three LNG receiving terminals at a combined cost of 1.67 billion US dollars, company president Sutikno said Tuesday.

One LNG receiving terminal will be built in West Java at an estimated cost of 650 million dollars, Sutikno was quoted by Thomson Financial as saying during a hearing at the lower house of Parliament.

He said the LNG receiving terminal will be constructed in three stages -- the first stage with a capacity to store 200 million standard cubic feet per day of gas is expected to be completed in 2012.

The second stage with the same capacity is expected to be completed in 2018, while the third stage with a capacity to store 400 mmscfd is expected to be completed in 2024.

Sutikno said PGN will also build one LNG receiving terminal in the East Java province at an estimated cost of 574 million dollars. The terminal will be constructed in two stages -- the first stage with a capacity to store 200 mmscfd of gas is expected to be completed in 2011 and second stage with a capacity of 200 mmscfd would be finalized in 2017.

PGN will also build one LNG receiving terminal in North Sumatra's town of Medan at an estimated cost of 446 million dollars. The terminal, which will have a capacity to store 200 mmscfd of gas, is expected to start commercial operations in 2011, pending the completion of a gas pipeline linking the towns Duri and Medan.

Sutikno said PGN plans to buy gas from the Bontang LNG project in East Kalimantan as well as West Papua's Tangguh LNG project, which will be piped to the above mentioned LNG receiving terminals.

Sutikno also said PGN expects its gas sales volume to hit 716 mmscfd this year compared to 413 mmscfd at the end of last year.

PGN recently secured contracts to purchase gas from 15 producers, including Pertamina, ConocoPhilips, Lapindo Brantas, BP Muara Karang, Kodeco, Santos Ltd and Husky Oil, with a total volume of 1,063.3 mmscfd.

Sutikno is expecting these new contracts to begin supplying gas from 2010.

PGN in talks to buy gas from ConocoPhillips

Ika Krismantari, The Jakarta Post, Jakarta

State-gas distributor Perusahaan Gas Negara (PGN) hopes to buy natural gas from ConocoPhillips' gas field in Grissik, South Sumatra, following the termination of the company's gas supply contract with Singaporean buyers.

PGN president director Sutikno said Wednesday the company was currently negotiating with ConocoPhillips and the Upstream Oil and Gas Regulatory Agency (BP Migas) to buy gas from the Grissik field.

He said the company offered to buy the gas from ConocoPhillips for between US$3.8 and $4 per million cubic feet per day, with no response so far.

Sutikno said the company planned to sell the gas to a Batam power company, which was currently suffering a gas deficit of 40 million cubic feet per day.

The government terminated the gas export contract with Singaporean firm Island Power (IP) in June, after the company failed to secure a pipeline connection with another Singaporean company, Gas Supply Pte. Ltd. (GSPL), a subsidiary of Temasek Holdings, within a period of time given by the government.

Under the agreement between the government and IP, Indonesia was to deliver 110 million standard cubic feet per day of gas to IP, over a period of 13 years ending 2014.

Under the plan, the gas from ConocoPhillips' gas field in Grissik would be transmitted via a 470-kilometer pipeline across Batam.

At present, Singapore still receives gas from ConocoPhillips and its partners' fields in Natuna. Like Singapore, Malaysia also has a contract for the supply of gas from the Natuna field. This contract runs for 20 years up until 2020.

BPMigas deputy chairman for marketing and finance Eddy Purwanto said in addition to PGN, several companies expressed an interest in buying gas from the Grissik field.

"We are still discussing it. We will see who makes the best offer," Eddy said to reporters after signing an anti-corruption pact with BPMigas executives.

Meanwhile, a subsidiary of the country's largest publicly traded oil company, PT Medco Energy Internasional, has agreed to sell natural gas (around 110 million cubic feet per day) to state-owned fertilizer producer Pupuk Iskandar Muda (PIM).

The gas would go to PIM's fertilizer plant in Nanggroe Aceh Darussalam under a seven-year contract beginning 2010.

Upstream Oil and Gas Regulatory Agency's chairman Kardaya Warnika on Tuesday said PT Medco Exploration and Production (E&P) would sell the gas to PIM at a price of US$5 per million British thermal unit (mmbtu).

He said the deal also included an agreement to raise the price, should the price of fertilizer in the global market exceeded $360 per ton.

PIM has been unable to operate to full capacity for the last three years due to the gas shortage.

BP Migas to cut mandatory exploration period

Ika Krismantari, The Jakarta Post, Jakarta

The Upstream Oil and Gas Executive Agency, or BPMigas, is considering shortening the mandatory exploration period in the oil and gas sector to three years from 10 years to speed up exploration at newly awarded oil and gas blocks.

BPMigas chairman Kardaya Warnika said here Tuesday if oil and gas companies failed to find oil or gas reserves during the three-year period, they would have to return the concession areas to the government.

Should the companies succeed in finding oil or gas reserves during the period, they would be not be given deadlines for conducting drilling activities, he said.

Under the current regulation, oil and gas contractors are given 10 years to carry out exploration and drilling activities, or the government will revoke their rights.

"We plan to exclude drilling activities from the list of commitments stated in the exploration stage. We are aware that drilling can be done only if the feasibility study proves that reserves are available. If there are not any, we don't have to do the drilling," Kardaya said.

He hoped that under the new arrangement, the government would be able to meet its target of a 30 percent increase in oil and gas production by 2009.

The country's oil production has been suffering a downward trend, with oil production declining from 1.3 million barrels per day in 2001 to about 950,000 barrels per day this year, according to data from the Energy and Mineral Resources Ministry.

Indonesian gas production has also declined, from 8.6 billion cubic feet per day in 2003 to 8.1 billion cubic feet per day in 2006 and an estimated 8 billion cubic feet per day this year.

This decline in production is mainly the result of falling production at aging oil and gas fields.

In another effort to boost the country's oil production, the government said earlier it planned to offer companies developing new oil and gas concessions in deep sea and frontier areas more favorable production splits.

Director general of oil and gas Luluk Sumiarso said recently that under the planned production sharing scheme, oil and gas companies operating in deep sea and remote areas would receive 49 percent of the net production, while the government would take 51 percent.

This offer is far better than the government's current arrangement, under which investors receive 15 percent and 30 percent, respectively, from oil and gas production.

With those plans on the table, Kardaya was optimistic oil production would increase to around 100,000 barrels per day next year, meeting the production target of 1.03 million barrels of oil set by the government in the 2008 state budget.

Pertamina to import two million gas cylinders from Taiwan

Jakarta (ANTARA News) - State oil and gas company Pertamina plans to import two million 3-kg gas cylinders from Taiwan to speed up the government`s kerosene-to-gas conversion program, its vice president director said.

"Domestic gas cylinder makers are likely to miss the target of producing six million 3-kg gas cylinders and therefore, Pertamina is applying for a permit to import around two million 3-kg gas cylinders from Taiwan," Iin Arifin Takhyan said here Tuesday.

Actually, Pertamina needed 4.6 million 3-kg gas cylinders, he said.

In their meeting with the Industry Ministry recently, domestic gas cylinder producers admitted they would have difficulties fulfilling the demand for 4.6 million 3-kg gas cylinders, he said.

"The import will only be made in 2007. In 2008 I think domestic producers will be able to meet the demand," he said.

The plan to import gas cylinders was part of the government program to procure 10 million 3-kg gas cylinders, he said.

CNOOC Ltd. announces start-up of gas project in Indonesia

Tradingmarkets.com, Monday, September 24, 2007; Posted: 07:45 PM

BEIJING, Sept 25, 2007 (Xinhua via COMTEX) China National Offshore Oil Company Limited (CNOOC Limited) announced on Monday that the phase two of the Southeast Sumatra (SES) gas project has started production.

The contractual gas delivery rate of the phase two of the project would be 78.4 million cubic feet (approximately 2.22 million cubic meters) per day, but the company did not state the current daily output.

The project is located about 120 kilometers offshore West Java in Indonesia, with an average water depth of 30 meters.

The development facilities in phase two include a production and processing platform, a gas plant, a gas compression and processing platform and three sub-sea pipelines.

The natural gas produced will mainly be supplied to the power plant of the state utility company PT Perusahaan Listrik Negara (PLN).

Liu Jian, executive vice president of the CNOOC Ltd., said the successful start-up of SES phase two would not only boost CNOOC's overseas gas production, but also supply more clean energy to the local people.

CNOOC Ltd. holds 65.5 percent interest of Southeast Sumatra production sharing contract (PSC) and acts as the operator. The PSC partners include Japan's INPEX Sumatra, Ltd., KNOC Sumatra Ltd., Orchard Energy Sumatra BV, Fortuna Resources (Sunda) Ltd., Talisman UK (Southeast Sumatra) Ltd. and Talisman Resources (Bahamas) Ltd..

Muladi consortium wins US$9.4 mln gas pipeline deal in Indonesia

Jakarta (ANTARA News/Asia Pulse) - State-owned electricity company PLN has declared the consortium of PT Muladi the winner of a tender to build a pipeline to transport gas from Muara Bekasi to its power plant in Muara Tawar.

The consortium, which also includes PT Wali Nusa and state-owned steel maker PT Krakatau Steel, would build the 7.2km pipeline at a price of Rp85 billion (US$9.4 million), PLN executive Tonny Agus M. said.

The gas is supplied from South Sumatra through a submarine pipeline owned by state-owned gas distributor PT PGN. Construction would take six months and by March 2008, the project is expected to be operational

Residents unhappy with free gas stoves

The Jakarta Post, Jakarta

A government initiative to phase out the use of kerosene in households and replace it with gas has received a mixed response from the public, with some Jakarta residents wanting to return their free gas stoves.

Some residents in Kebon Sirih subdistrict, in Central Jakarta, reportedly want to return their free gas stoves out of fear they will cause fires. But other residents have actually welcomed the giveaways, which were distributed on June 30.

"Using a gas stove (to cook) is actually pretty convenient, as food cooks quicker," housewife Harni "Nita" Yusnita told The Jakarta Post on Saturday. "The only thing is the limited capacity of the tank; only 3 kilograms, and the price of a refill is expensive."

Nita reverted back to using kerosene after her free gas supply ran out, as none of the nearby shops sell the refills.

The distribution of gas stoves and liquid petroleum gas (LPG) cylinders to poor households in Jakarta is part of a government effort to phase out heavily subsidized household kerosene, which is mostly used as cooking fuel.

The retail price for a 3-kilogram gas refill, which is currently subsidized by the state, is Rp 15,000 (equivalent to US$1.66) -- higher than the official state-owned oil company PT Pertamina price of Rp 12,750.

Pertamina currently holds a monopoly over nearly 95 percent of the country's fuel distribution.

The cost of a gas refill is equivalent to about six liters of kerosene, based on the current rate of between Rp 2,000 and Rp 3,500 per liter.

According to Nita, a 3-kg gas refill lasts for about three days when used moderately, while six liters of kerosene usually lasts a week.

Nita said she had no qualms about safety in converting to gas, since she had followed proper procedures.

"I think many residents got too excited when they received their free stoves and failed to check the regulator prior to installing the set ... this is probably why fires started," Nita said, referring to a an inferno that razed 50 houses in a densely populated area in Cawang, East Jakarta, in late June.

The fire was reportedly sparked by one of the giveaway stoves a resident was trying to turn on. No deaths or injuries were reported in the blaze.

A neighbor of Nita and food stall owner, Ana Radianawati, was eager to start using her gas stove, but delayed doing so as she had just bought a brand new kerosene stove.

"It would be such a waste to ditch the one I just bought for the gas one," said Ana, who has been selling food in the neighborhood for more than 15 years.

Darojat Tafsir, another Kebon Sirih resident, told the Post that while most Kebon Sirih residents preferred using gas stoves, there were a few who had difficulty in converting from kerosene.

"A couple of my neighbors, particularly the older ones, don't know how to use them ... they have used kerosene for so long," Darojat said.

The city consumes about 2.7 million liters of kerosene per day.

A severe shortage of the country's kerosene supply, which affected a number of cities, has caused prices to skyrocket, with low-income households bearing much of the brunt.

The government, which allocated Rp 40 trillion in 2006 to subsidize millions of kiloliters of kerosene for household use, eventually introduced an ambitious nationwide program of converting to LPG.

The initiative, launched by Vice President Jusuf Kalla on May 8, 2007, has been implemented by Pertamina, which is set to distribute more than 300,000 gas stoves and 3-kg LPG cylinders to around 400,000 poor households that are still using kerosene stoves in Jakarta, Depok and Tangerang.

The program will also extend to Medan, Palembang, Semarang, Surabaya, Denpasar, Banjarmasin, Makassar and several other major cities around the country.

PLN launches tender for Muara Bekasi-Meara Tawar gas pipeline

Jakarta (ANTARA News) - Indonesia's state-owned electricity company PT Perusahaan Listrik Negara (PLN) said it has launched a tender for the construction of a 7.2-kilometer gas pipeline from Muara Bekasi to its Muara Tawar power plant in West Java.

Tony Agus Mulyantono, PLN's deputy director for primary energy and power plants, said 10 companies have expressed interest to participate in the bidding process.

He gave no further details.

He was quoted by Thomson Financial as saying construction of the gas pipeline is expected to start in September..

25 companies in competition to provide 400,000 gas stoves

The Jakarta Post - 2007-01-08 10:33

Jakarta, January 06, 2007 (The Jakarta Post) - A total of 25 major companies have satisfied the pre-qualification requirements in the government tender to provide 400,000 gas stoves for low-income households in Jakarta and Banten.

Among the 25 companies, which specialize in the manufacturing of kitchen appliances, are PT Star Cosmos, PT Sanken Argadwija, PT Pindad, PT Rinai Indonesia and PT Maspion.

The winner of the tender, which is part of the government's effort to reduce kerosene consumption and thereby cut fuel subsidy spending, will be announced at the end of January, and production will start in early February.

The government has allocated Rp 58.7 billion out of the 2007 budget for the production and distribution of the stoves.

"According to Presidential Decree No. 80/2003, the winner of a tender worth more than Rp 25 billion is obliged to work together with small and medium enterprises. This also applies to the production of the gas stoves," said State Minister for Cooperatives and Small and Medium Enterprises Suryadharma Ali during a media briefing Friday.

"The winning company will have to sign a written commitment to work with small and medium enterprises, and will face legal consequences if it breaches that commitment," the minister said.

"We are hoping that at least three small to medium-scale industrial hubs in Yogyakarta, West Java and Banten will become involved in the production of the stoves. These hubs have hundreds of people working in this sector," Suryadharma said.

"The gas stoves will be made using 100 percent local content," he added.

The winning company would be required to conduct quality control over the production of the stoves.

The ministry expects to distribute a total of one million gas stoves this year, with the first-phase distribution of 400,000 gas stoves to be conducted between March and May.

Low-income households will be given the gas stoves for free by exchanging their old kerosene stoves through their local sub-district offices.

In mid 2007, about Rp 100 billion more will be allocated from the budget, if the legislature agrees to approve the second-phase of the program, which would see the nationwide distribution of 600,000 stoves between October and December.

According to a government official, the energy content of a liter of LPG, currently sold at Rp 4,250 (about 46 US cents), is equal to the energy content of three liters of kerosene, with the price of subsidized kerosene currently standing at Rp 2,275 per liter.

MMC Unit Wins US$48.2 Mln Indon Project

KUALA LUMPUR, Jan 5 (Bernama) -- MMC Corporation Bhd's subsidiary, MMC Oil and Gas Engineering Sdn Bhd, has won a US$48.2 million contract from PT Transportasi Gas Indonesia.

In an announcement to Bursa Malaysia, MMC said the contract was to undertake phase one of the engineering, procurement, construction and commissioning of the Jabung gas booster compressor station project in Indonesia.

"MMC Oil and Gas Engineering is the leader of the consortium, comprising PECD Construction Sdn Bhd and PT Elnusa Petro Teknik, which won the deal.

"The contract is expected to contribute positively to the future earnings of the MMC Group," it said.

US$1.1b PGN pipeline expected to come onstream next month

The Jakarta Post, Jakarta

President Susilo Bambang Yudhoyono has been drafted in to inaugurate a US$1.1 billion pipeline linking South Sumatra and West Java some time before the end of this year.

The pipeline, which will be operated by state-owned gas distributor PT Perusahaan Gas Negara (PGN), will supply between 300 million and 400 million standard cubic feet of gas per day (MMSCFD).

PGN's newly appointed president director, Sutikno, said Friday in Jakarta that the construction work was now 85 percent complete.

"We hope that operations can commence on Dec. 21," he said following an extraordinary shareholders, which endorsed his appointment as the company's top executive, replacing WMP Simanjuntak.

The project, comprising two pipeline tracks spanning a total of 1,106 kilometers from Grissik in South Sumatra to Rawa Maju in West Java, started last year.

"We hope we will be able to get additional gas supplies of about 300 million MMSCFD next year, thanks to this project," said PGN finance director Djoko Pramono.

The company said last year that when the pipeline came onstream, the company would see its 2007 revenues triple from the Rp 4.4 trillion (US$488 million) recorded in 2004.

The company booked a 22 percent revenue increase to Rp 5.4 trillion in 2005, as compared to 2004.

The gas distributor's net profit in the first nine months of this year rose 251 percent to Rp 1.5 trillion from Rp 427 billion a year earlier, while revenues from gas sales and transmission as of Sept. 30 jumped to Rp 4.9 trillion from Rp 3.9 trillion in the same period last year.

The meeting also endorsed the appointment of new development director Adil Abas, and also appointed Sutikno to double up as the company's business director.

Djoko was also named director for general affairs, while Simandjuntak was appointed to the company's board of commissioners.

PGN is the dominant player in the Indonesian natural gas market.

Next year, the company is planning to build another pipeline connecting Medan in North Sumatra and Duri in Riau. The 465-kilometer pipeline, which will have a total capacity of 250 MMSCFD, will cost about $490 million.

ADB to Assist in Developing Major Natural Gas Project in Indonesia

JAKARTA, INDONESIA - ADB today signed a $350 million loan to help develop the Tangguh Liquefied Natural Gas Project in Irian Jaya Barat province, Indonesia.

“ADB is committed to assisting in the development of Indonesia’s energy-producing capabilities in line with international standards and best practices for environmental and social standards,” said Robert Bestani, Director General of ADB’s Private Sector Department.

The Tangguh Liquefied Natural Gas Project will develop, build and operate gas production wells, platforms and a liquefied natural gas (LNG) facility to export gas initially to the People’s Republic of China, Republic of Korea and the West Coast of North America.

The multi-billion dollar project is being developed by the London-based energy firm BP, which has significant equity interest in the project. The remaining financing will come from various international investors and banks, including Japan Bank for International Cooperation (JBIC).
ADB expects the project to generate financial benefits to the Indonesian government to support the shared goal of reducing poverty via sustainable economic growth.

“The project encourages clean energy use around the region,” said Mr. Bestani. “At the same time, it will increase revenue flows to the national, provincial and local governments. These funds can accelerate social and economic development and reduce poverty.”

The project is important for Indonesia in its energy development and export efforts, and it will help Indonesia maintain its position globally as a key LNG export centre. It will also provide environmentally benign LNG to the region, and promote the use of cleaner fuel in countries such as the PRC and Korea.

The project includes a comprehensive social and environmental program based on extensive consultations with the affected communities and in line with ADB's social and environmental safeguard standards. Currently, BP is also working with other donor agencies and civil society in implementing its corporate social responsibility programs.

ADB, through its Indonesia Resident Mission in Jakarta, will also coordinate with BP and other donor agencies in scaling up capacity-building programs aimed at strengthening local governance, according to Edgar A. Cua, ADB’s Country Director in Indonesia.

“Sustainable development, cultural preservation, maintaining biodiversity and improved local governance are core principles at the heart of this project,” Mr. Cua said. “Moreover, this is an excellent example of the large scale infrastructure projects that are needed in Indonesia.”

ADB's participation will catalyze a significant amount of long-term debt to support Indonesia's energy sector. Since this is ADB's first private sector project in Indonesia's oil and gas sector, it has the potential to spur subsequent projects not only in Indonesia but also in the region.
“Tangguh LNG is the largest private sector project for Indonesia since the Asian financial crisis,” said Mr. Bestani. “Its successful completion demonstrates the private sector’s increasing confidence in the country.”

Support for the private sector is one of ADB’s key financing tools, and ADB’s Private Sector department is one of the fastest growing parts of the institution. A total of 29 financial markets and infrastructure projects providing $1.3 billion in assistance in the private sector are expected by end of August this year. These investments act as a catalyst to mobilize funding from other sources, leveraging ADB’s own funds by nearly 10 times.

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ADB to Assist in Developing Gas Pipeline Project in Indonesia

MANILA, PHILIPPINES - A $75 million loan will promote clean, indigenous energy in Indonesia by assisting in the construction of a 661 km natural gas pipeline from South Sumatra to West Java.

In addition to a direct loan without government guarantee to the Indonesian energy firm PT Perusahaan Gas Negara (PGN), ADB will support loans of up to $125 million to PGN provided by other international financial institutions and commercial banks, also without government guarantee.

The $652.5 million project involves the construction of a pipeline for the transportation of natural gas from major gas fields in South Sumatra to the major gas consuming areas of West Java. The pipeline is one of two being built by PGN to address a shortage of natural gas in West Java.

“This pipeline will promote clean energy,support economic growth in West Java and is also a strong endorsement of Indonesia’s sector reforms in the oil and gas sector,” said Stephen N. Edwards, Structured Finance Specialist with ADB’s Private Sector Department.

PGN, an Indonesian gas utility involved in the transmission, distribution, and sale of natural gas, is 61% owned by the Government of Indonesia. Holding over 90% of the gas distribution market, PGN has a dominant position in the country’s gas industry.

The project is ADB's second non-sovereign guaranteed operation in Indonesia's oil and gas sector. The first one, a $350 million loan to help develop the Tangguh Liquefied Natural Gas Project in Irian Jaya Barat province, was signed last 1 August.

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