Pertamina: Small Scale LNG Right Choice for Eastern Indonesia

The adoption of Small Scale LNG is the right choice in providing primary energy in East Indonesia region with the potential to save up to US$5.4 billion worth of fuel annually, Pertamina said in a statement.

Currently the electricity production cost in East Indonesia, such as Sulawesi, Papua, Maluku and Nusa Tenggara now is two- to five-times higher than the electricity production cost in Java, Bali and Sumatera because majority of power plants are still diesel-fueled. On the other hand, the effort to optimize gas utilization through pipe network, transmission and distribution is still not economical to develop because the scale of gas demand is still marginal, varying between 3 MMscfd to 30 Mmscfd.

“Unlike Java and Sumatera, extensive construction of gas pipe network in East Indonesia is not feasible because of the low demand for gas. Small Scale LNG is the most strategic solution to bridge the supply condition, demand and the geographical condition as well as the distance between gas supply point to gas demand point in the region,” said the Vice President for Strategic Planning and Business Development Gas Directorate of PT Pertamina , Yenni Andayani.

Utilization of LNG, Yenni said, would create a chain-effect for the region, such as accelerating the industry growth, accelerating city gas utilization, and particularly utilization efficiency of primary energy power plants. If it could be realized, she said, the use of LNG for power plant would save up to US$ 5.4 billion per year in term of the cost of primary energy power plant because of lower diesel fuel usage.

“As such, this will also indirectly impact the effort to accelerate the electrification ration in the East Indonesia region,” she said.

At the moment, PT Pertamina Gas, a subsidiary of Pertamina, is collaborating with PT Indonesia Power, a subsidiary of PT PLN (Persero), to form a joint-venture PT Pertadaya Gas that will conduct several Small Scale LNG projects in East Indonesia. Some power plant that will employ the technology include the power plant in Maros, Pesanggaran, Tanjung Batu, Batakan, Pomalaa, Halmahera, and Kupang, expected to start operation in between 2014-2016.

“The total capacity of Small Scale LNG in East Indonesia will reach around 1 million tons per year, ” she concluded.

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LNG World News Staff, May 7, 2013