Bontang to produce up to 10 cargoes of LPG starting next year

The Bontang LNG plant in East Kalimantan would use its idle capacity to produce up to 10 cargoes of liquified petroleum gas (LPG), rather than LNG, in the next two years to meet the increasing demand from the domestic market, upstream oil and gas regulator BPMIGAS said on Tuesday.

"We shall allocate (some production facilities to produce up to) 10 cargoes (per year) from 2011 through 2012," BPMIGAS's deputy chairman for operational affairs Budi Indianto told Petromindo.com on Tuesday.

One cargo contains 125,000 cubic meters of gas.

Budi said last month that the idle capacity of the Bontang LNG plant will reach between 4 and 6 cargoes this year and 20 cargoes next year as demand from export market is decreasing and the local market could not yet absorb them due to a lack of gas infrastructure.

State owned oil, gas firm PT Pertamina's director of investment planning and risk management Frederick Siahaan was quoted by Bloomberg as saying that Pertamina is planning to increase imports of LPG to 2 million metric tons this year from a year earlier as demand is forecast to grow to 4.3 million tons from 3.1 million tons as a result of the national kerosene-to-LPG conversion program.

The Bontang LNG plant once produced LPG for Pertamina, but suspended the production due to the lack of gas feeds. It restarted the production in June 2009 but suspended again several months later as it planned to dedicate all its facililities for the production of LNG.

In March this year, Pertamina has asked PT Badak NGL, the operator of the Bontang LNG plant, to produce LPG again so that the rising demand for LPG thanks to the conversion program could be met.

Shortage of LPG supply on the domestic market is estimated at around 909,000 metric tons this year due to the rising demand for the fuel, Pertamina?s director of marketing and trade Djaelani Sutomo said on March 3. (bernard)