Govt may allocate 1.5MTPA of Bontang capacity to PLN

Upstream oil, gas authority BPMIGAS said government might allocate some 1.5 million tonnes per annum (MTPA) of Bontang LNG plant capacity for domestic consumption starting 2010-12, including to state electricity firm PLN.

BPMIGAS Merketing Division Head Budi Indianto told Petromindo.Com on Friday that the allocation was part of government’s commitment to meeting domestic gas demand.

“With supply of 1.5MTPA, PLN could start construction of its LNG receiving terminal in West Java,” he said. He, however, said that BPMIGAS would conduct due diligence on PLN’s absorption capacity. “If PLN could not take the whole volume, then some might be allocated to state gas distribution firm PGN or state miner Antam, which have also asked for LNG supply,” he said.

PLN, in a bid to secure gas supply for its power plants in Java, has been asking for LNG supply allocation from Bontang and Tangguh LNG plants. The company is planning to build an LNG receiving terminal in West Java. PGN also plans to set up a similar facility in East Java.

Budi said that the government has also decided to allocate a maximum of 5MTPA of Bontang LNG to Japanese customers known as Western Buyers to extend their existing 12 MTPA existing contracts, which would end in 2012.

Under the scheme, said Budi, Bontang would supply 3MTPA for the first three years and ramp up the volume to 5MTPA for the remaining length of the contract. He did not disclose the length of the contract.

Budi said negotiation with Western Buyers might be completed next month.

East Kalimantan’s Bontang LNG plant, which is used to be the world’s largest LNG plant with 22 MTPA capacities, is currently operating with 18 MTPA capacities due to dwindling gas supply from two of its three producers, namely VICO Indonesia and Chevron Corp. Only Total E&P Indonesie can still meet production commitment of 2.6 BCFD. Output form the three producers will constantly declining towards 2012, with the exception of Chevron, which may add some 800MMCFD to its production in 2015, when its deep water projects are expected to come onstream.

VICO Indonesia, which has been producing gas since the seventies might not be able to continue production after 2012 due to reserves depletion.

Budi did not say whether the government has also allocated East Kalimantan gas for the proposed billion dollar project East Kalimantan to Java pipeline project, which will require 1BCFD of gas to become commercial. (godang)