Govt issues final decision on Arun LNG project and FSRU Belawan
Wednesday, March 21 2012 - 03:01 AM WIB
After months of uncertainty, Minister of State Enterprise Dahlan Iskan has finally made decision, instructing state oil and gas company PT Pertamina to carry on the revitalization and conversion of Arun LNG project and ordering gas distributor PT Perusahaan Gas Negara Tbk (PGN) to relocate Floating Storage and Regasification Unit (FSRU) Belawan, near the city of Medan in North Sumatera, to Lampung in southern Sumatera.
PGN said in a filing to the Indonesian Stock Exchange that it has received a letter from the State Enterprise Minister on March 20 No. S-141/MBU/2012 dated March 19, 2012 with regard to the Arun LNG modification and FSRU Belawan projects.
Following is the highlights of the Minister?s decision:
1. FSRU Belawan project is to be relocated from Belawan to Lampung and that PGN is asking to strengthen piped gas infrastructure in the surrounding area;
2. Pertamina will soon realize the modification of LNG Arun into a receiving and regasification terminal, which will be integrated into pipeline from Arun to North Sumatera region and should commit to finalize the project by end of 2013;
3. All the costs components that have been spent by PGN during the preparation of the FSRU Belawan will be included in the cost to revitalize the Arun LNG and pipeline network projects. In relation to this, the minister instructs Pertamina to appoint an independent auditor to verify the costs that have been spent by PGN.
4. Pertamina is asked to prepare alternative solution (contingency plan) if the modification of LNG Arun plant would not be completed as scheduled, so that industries in northern Sumatera area will still get gas when gas supply from PGN, under existing contract, ends in 2014.
5. The ministry has requested the Head of the Presidential Work Unit Development Supervision and Control (UKP4), headed by Kuntoro Mangkusubroto, to include the two projects in the Inpres (Presidential Instruction) on the Acceleration of the Implementation of National Development Priority Programs for 2012.
?With regard to the planned syncronization of the FSRU Belawan with the revitalization of LNG Arun receiving terminal, PGN will soon follow up the decision by undertaking necessary steps to honor existing contracts, both to customers and suppliers,? PGN Corporate Secretary Heri Yusuf said in the statement to IDX.
PGN will also undertake preparatory steps related with permits and other matters in materializing the project in the new location, i.e. Lampung.
PGN has recently signed a contract with a consortium of PT Hutama Karya, PT Darma Empat Lima, and PT Ilamaru Jaya to install its gas pipelines from its floating storage and regasification unit in Belawan, North Sumatra.
H?egh LNG Holdings Ltd of Norway has earlier entered into binding Heads of Agreement (HoA) with PGN for the FSRU) offshore Belawan. The HoA is based on the use of H?egh LNG's first FSRU newbuilding due for delivery at the end of 2013 and under construction at Hyundai Heavy Industries in Korea.
Editing by David Mustakim