Indonesia's Pertamina, PLN ink agreement on Arun regasification plant
Jakarta (Platts)--22Jan2013/534 am EST/1034 GMT
Indonesia's state-owned oil and gas company Pertamina has signed a heads
of agreement with state-run power utility Perusahaan Listrik Negara for the
latter to use Arun LNG's regasification facilities once the liquefaction
plant has been converted.
Under the agreement inked Tuesday in Jakarta, PLN will regasify 1
million mt/year of LNG, or 105,000 Mcf/d of gas, at the plant, a senior PLN
PLN will pay Pertamina $1.2-1.6/Mcf of gas that it regasifies at the
plant, Suryadi Mardjoeki, PLN's head of fuel division told Platts. "The gas
will be used to meet power demand in Aceh and North Sumatra," he added.
Pertamina in November awarded local contractor Rekayasa Industri an
engineering, procurement and construction contract for the conversion of the
33-year old Arun LNG plant into a receiving and regasification terminal.
The company, however, is yet to sign the final EPC contract as it wants
to ensure that it has firm LNG supply deals before it proceeds with the
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The HOA with PLN will help the company move closer to finalizing the
Pertamina expects to get another LNG supply contract from a domestic
project, Pertamina Gas Director Hari Karyuliarto said Tuesday. But if it
does not get domestic LNG allocations, the company will look at imports, he
The company's communications chief, Ali Mundakir, said Tuesday
that Pertamina is targeting a mid-2014 completion of the conversion project.
Pertamina is planning for the Arun facility to have a regasification
capacity of 400,000 Mcf/day and the gas will be allocated for power
generation, to fertilizer companies and other industries in Nanggroe Aceh
Darussalam and North Sumatra provinces, the company said earlier.
The Arun LNG plant, located in Nanggroe Aceh Darussalam, started
operations in 1978 and strengthened Indonesia's position as an LNG exporter.
The country had just begun exporting LNG from its Bontang plant the year
The plant, with an annual production capacity of 6.5 million mt across
four trains, had been a reliable LNG supplier to Japan and South Korea until
around 2004 when dwindling gas production at nearby fields led to a drop in
the plant's output.
The facility has been exporting under 30 LNG cargoes since 2011 compared
with 38 in 2010 and an average of around 150 cargoes between 1978 and 2003.
Arun NGL, operator of the plant, has been gradually winding down its export
contracts from the plant and the last of the contracts with the Japanese and
South Koreans are due to expire in 2014.
PLN'S SECOND AGREEMENT
This is PLN's second regasification deal in less than two months.
The utility last month signed a HOA with BP for the British major to
supply PLN with 23.96 million mt of LNG from its Tangguh project in eastern
The companies expect to convert the HOA into a sales and purchase
agreement by mid-2013, BP Regional President Asia Pacific William Lin said
The contract is expected to run for 20 years starting in 2013 and is
worth a total of $5.80 billion, Indonesian Energy and Mines Minister Jero
Wacik said after the signing of the HOA.
PLN will process the LNG at Nusantara Regas' 3 million mt/year West Java
floating storage and regasification unit for a regasification fee of $2/MMBtu.
Nusantara Regas is a joint venture between Pertamina (60%) and gas
utility Perusahaan Gas Negara (40%).
--Anita Nugraha, email@example.com
--Edited by Mriganka Jaipuriyar, firstname.lastname@example.org; E Shailaja Nair,