Govt to Open Up LNG Imports to Private Firms

 “The president, in a cabinet meeting, has approved in principle the plan for firms to import gas,” Hidayat said, adding that the importable volumes would be determined later.

Ministry data estimates business demand for LNG this year to reach 2,798.69 million standard cubic feet per day (mmscfd), and 3,283 mmscfd by 2015. But the country’s state oil and gas company, Pertamina, and state gas distributor, Perusahaan Gas Negara, can only meet half of that demand because most of the natural gas produced here is for export.

The country has three LNG plants: Arun in Aceh, Bontang in East Kalimantan and Tangguh in Papua. The LNG from the three plants, however, is being sold overseas on long-term contracts.

I Gusti Putu Suryawirawan, a ministry official, said that by allowing local businesses to import their own LNG, productivity would be boosted and more investors would be attracted to the country.

“Local industries are struggling to find energy sources, but now they will have cheap options,” he said

“Investors will also be more interested in Indonesia if we can assure them we can meet their energy needs.”

However, Putu said the government would need to carefully monitor LNG imports, and whether the gas was used properly by industry or sold on to other parties.

“It would need a coordinated monitoring team from the Industry Ministry and Energy Ministry to oversee the distribution of imported gas,” he said.

He said another way to avoid natural gas shortages would be to review LNG export contracts and allocate more to local companies. “If Indonesia wants to reach and sustain its ideal economic growth, we need to boost our industries,” he said. “What our industries need are two things: certainty of energy supply and raw materials.”

PLN’s president director, Dahlan Iskan, said in June that it was seeking to purchase LNG from countries including Iran, Kuwait, Australia and Papua New Guinea.

According to Dahlan, PLN needs approximately 1,800 mmscfd of natural gas to fire its electricity plants to produce a total of 9,800 megawatts. But the government only provides 800 mmscfd of natural gas, which means the plants have to make up for the shortfall by using the equivalent in diesel and gas.

Dahlan said that if all its power plants used natural gas, PLN could save up to Rp 60 trillion ($7 billion) in fuel costs.

Bobby Adhityo Rizaldi, a member of House of Representatives’ Commission VII, which oversees energy affairs, urged the government to ensure PLN’s natural gas supplies.

“The government should help PLN to get gas from those sources,” the Golkar Party lawmaker said. “It’s not fair on PLN.”

Jakarta Globe