Indonesia's Pertamina awards EPC deal for Arun LNG plant modification

Jakarta (Platts)--7 Nov 2012 427 am EST/927 GMT

Indonesia's state-owned oil and gas company Pertamina has given local contractor Rekayasa Industri an engineering, procurement and construction contract for the Arun LNG plant, which is being changed into an LNG receiving and regasification terminal, an official said Wednesday.

The EPC contract will be signed after the company receives firm LNG allocation from the government, Pertamina's vice president for communication Ali Mundakir said in a statement.

Pertamina plans to modify Arun LNG plant to be a receiving and regasification LNG terminal with a capacity of 400,000 Mcf/day. The gas output will be allocated for power generation, to fertilizer companies and other industries in Nanggroe Aceh Darussalam and North Sumatra provinces.

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But Pertamina has not received gas allocation for the project. The government is still discussing the price for 140,000 Mcf/d of LNG supply from Tangguh for Arun, Mundakir said. Pertamina plans to complete the project in 2013.

Meanwhile, the director general for oil and gas in the Energy and Mines Ministry Evita Legowo said late Tuesday that the government would guarantee LNG allocation for Pertamina's Arun modification project and the proposed floating storage and regasification unit in Central Java. The LNG supply will come from Tangguh cargoes diverted from Sempra Energy.

BP is the operator of the Tangguh project with a 37.16% interest. It is committed to supplying 3.7 million mt/year of LNG to US-based Sempra. Under the original contract with Sempra, Indonesia can divert upto half the amount to any other country to boost its revenue.

But Indonesia's upstream regulator BPMigas has said that BP and Sempra have reached a deal that allows Indonesia to divert 54 out of 60 cargoes originally committed to the US company, more than the original contract. The deal is valid for the rest of Sempra's contract, unless one of the parties needs to review it.

--Anita Nugraha, --Edited by E Shailaja Nair,

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