Indonesia: Pertamina Pioneers Utilization of LNG for Transportation

PT Pertamina (Persero) pioneers for utilization of Liquefied Natural Gas (LNG) as fuel for transportation sector and household, which is expected to reduce the consumption of BBM, reducing subsidy, and save State expenditure.

As the commitment in pioneering the use of LNG for transportation and household, Pertamina through its subsidiary, PT Badak NGL, performs test of LNG utilization for the Company’s operational vehicles. Besides, the trial is also conducted on three domestic stoves.

“Today is the starting point for LNG utilization for transportation and household sector. Starting with the operational vehicles of Badak NGL, it is expected to set the sample wider usage in the future, both in the transportation sector and household sector. Pertamina is committed to the develop required infrastructure for the successful LNG utilization for domestic use in the future,” said President Director of Pertamina Karen Agustiawan when witnessing the trial of LNG utilization for transportation and household at PT Badan NGL, Bontang, through video conference.

LNG business paradigm, which used to be export-oriented, has begun to shift since the operation of the Floating Storage Regasification Unit 1 Nusantara Regas on 24 May 2012 as the first receiving terminal, storage, and regasification of LNG in Indonesia to serve the needs of gas to PT PLN. Answering the domestic LNG era, the development of various applications for domestic LNG use has been more wide open, including the transportion sector and households.

Based on statistics by NGV Global, currently there are approximately 15 million gas-powered vehicles in operation worldwide. The record takes into account all types of gas-fueled vehicles, including those fueled by LNG, CNG and LGV.

Compared with gasoline and diesel fuel, LNG is more environmentally friendly because it can reduce emissions by about 85%. Furthermore, compared to CNG of the same volume, LNG’s energy density value is 3 (three) times denser. LNG can be stored in a low pressure (1 atmosphere) and has a longer travel distance.

In addition, the use of LNG as a fuel is also able to reduce vehicle operating costs because the price of LNG is cheaper than non-subsidized diesel fuel. LNG prices in the range USD 18-20/ MMBtu, while the non-subsidized diesel around Rp 9.807/liter or equal to USD 31/ MMBtu. LNG fuel is very suitable for large large vehicles with long operational distances such as buses, trucks, and locomotives, as well as for the sea freight sector.

Pertamina through its subsidiaries, namely PT Pertamina Gas and PT Badak NGL have begun working on the LNG market potential, particularly after for transportion of sector mining in Kalimantan. In the early stages, both have been cooperating with PT Mandiri Indominco, one of major coal mining companies in Kalimantan, as the end user of LNG.

During commissioning stage, aimed to be begin on 1 December 2012, a total of 4 Indominco’s inpit dump trucks will be using LNG as their fuel at an estimated LNG demand of about 60 MMbtud. When fully implemented, there are about 84 LNG-fueled high dump trucks, consuming around 3.97 Bbtud.

Meanwhile, the potential utilization of LNG in Kalimantan’s coal mining sector is estimated to reach about 0.62 million tonnes per year. That’s assuming the level of consumption of non-subsidized Solar by four major coal mining companies operating in the region reach 1.62 million kiloliters per year.

On a national scale, domestic Solar market potential in 2012 is approximately 16.3 million kiloliters and partly acquired through imports. When as little as 20% is converted to gas, there will be saving of at least USD 1.43 billion per year from State Budget.

Besides for transportation sector, LNG can be applied as alternative to household LPG. In various parts of the world, natural gas is commomnely used as fuel for domestic stoves for better safety and cleaner emission compared to LPG.

LNG is also much cheaper than LPG, which cost around US$22 per MMBtu. For the same energy value, LNG volume needed is lower by 14% compared to LPG.

To realize it, preparation of various supporting infrastructure is required. Development of LNG stations in some parts of Indonesia will depend of other Pertamina projects, such as FSRU and Mini LNG.

FSRU construction is needed to ensure the supply of LNG to region with large market demand but lacks gas supply, for example in West Java, or areas that do not have a gas source, such as Central Java. Besides, Mini LNG Plant is needed to meet LNG demand in areas near small-scale gas sources.

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Source: Pertamina, August 07, 2012