Itochu interested in Java LNG terminal

Japan's corporate powerhouse Itochu Corp was interested to be involved in the development of the LNG receiving terminal planned by electricity company PLN in western Java, a PLN official said on Thursday.

Ali Herman Ibrahim, a director of the state-owned PLN, told Petromindo.com the LNG terminal will likely be located in Cilegon regency of Banten province.

Jakarta-listed oil company PT Medco Energi Internasional Tbk was also interested to be a participant in the project, according to Ali.

PLN plans to build the terminal as part of its strategy to shift to cheaper natural gas from expensive fuel oil and to provide supply security for its power plants in the area. From the beginning, PLN said it would seek partner to develop the facilities.

Ibrahim added that the LNG could be sourced from any LNG producers in Indonesia.

For this project, PLN has assigned engineering firm Kellog Brown & Root to conduct an engineering study, which was supposed to be completed last month.

He earlier said that the facilities would be built in two stages. In the first stage, PLN will build a facility capable of handling 400 MMCFD of gas or 3 million tons of LNG per year. The capacity will be gradually ramped up to 800 MMCFD. The first facility is expected to be completed in 2007 with a total investment of around US$300 million.

PLN, Indonesia's largest gas consumer, is seeking to buy more gas to feed its new power plants and to cut down its fuel costs.

According to Ali, PLN will spend Rp 3.5 trillion ($1=Rp 8,500) to buy gas and Rp 13 trillion to buy fuel oil in 2004. (Alex)