Badak NGL shortlists steam plant developers

East Kalimantan-based LNG plant Badak NGL has shortlisted potential builders for its planned steam-producing plant but it said it needed clarification from the government on critical issues before going ahead with the plan.

Company CEO Yogi Suprapto told Petromindo.Com on Thursday that six  firms had passed pre-qualification tender to build the steam plant which will use coal as raw material. The firms are Japanese firms Marubeni Corporation, Mitsubishi Corporation, Sumitomo-Sojitz consortium; Chinese firms Dong Feng Corp. and Shanghai Boiler; and a South Korean boiler manufacturer.

Yogi said under the plan, Badak would purchase the steam to be produced by the steam plant, allowing the LNG plant to convert the gas it is currently using to produce steam into LNG to add some 15 cargoes of LNG to its production annually. One cargo of LNG normally carries weight of 55,000 tonnes. The steam is an important element in the process of freezing gas into LNG.

“We’ll hold review the bidders’ technical and financial capabilities and would hopefully be able to pick the winner by year-end,” he said, adding that the project could be valued at around US$1 billion.

The project could be completed within 36 months’ time, he said.

He, however, said that Badak NGL still needed confirmation from the government about the future of the LNG plant before making decision on the matter. “The steam boiler replacement could only be feasible if Badak operates at the capacity of at least 9 million tons per annum (MTPA),” he said. “If the government decides to cut LNG export to Japan to only three MTPA and pipe the gas, say, to Java, then the project will become completely unfeasible,” he said.

The government is planning not to grant 12 million tons of LNG contract extension to Japanese buyers when the current contracts expire in 2010-11 due to decreasing gas reserves in East Kalimantan and swelling domestic gas demand. The government has signaled it might  only give Japanese buyers six  million tons of contract extension.and would allocate the rest of the available volume to domestic market.

The government has yet give clear stance whether the gas for domestic market would be supplied in the form of LNG, which requires potential buyers such state electricity firm PLN or state gas distribution firm PGN to build LNG receiving terminals, or to pipe East Kalimantan gas to Java. Bakrie& Brothers, a company controlled by conglomerate cum minister Aburizal Bakrie has won the right to build gas pipeline from Kalimantan to Java, but it is yet to secure gas supply from producers.

“We hope the government make up its mind by year end to allow a decision for this project,” he said.

East Kalimantan gas producers that supply gas to Badak are Total Indonesie from Mahakam PSC, Vico Indonesia from Sanga-Sanga PSC and Chevron from several PSCs.

Badak will ship some 320 cargoes of LNG or around 18 million tons this and next years, he said. Badak produced 19 million tons of LNG in 2005. The plant has a production capacity of 22.5 million tons per year.(alex)