Japan will remain RI partner in Donggi-Senoro gas project

Japan will remain Indonesia?s partner in the development of the Donggi-Senoro LNG plant in South Sulawesi which has been delayed for years due to uncertainty in its funding.

Energy and Mineral Resources Minister Darwin Zahedy said in Jakarta on Friday that he had discussed the LNG project with Japan?s Minister of Industry and Trade Masayuki Naoshima during his recent visit to Jakarta.

?They hoped and we wanted the partnership between Indonesia and Japan in the project be continued,? he said. He, however, said that the government had not decided the percentage of LNG to be sold to the Japanese buyers.

Medco and Pertamina previously planned to build the LNG project in cooperation with Japanese company Mitsubishi. The LNG to be produced from the Senoro plant will be exported to Japan. The consortium later cancelled the project after it failed to get a green light from the previous government, which insisted that the LNG from the plant should be sold to local buyers.

Former Vice President Yusuf Kalla was the main supporter of the idea of the Donggi-Senoro gas being sold to local buyers.

Several domestic companies including PT Perusahaan Gas Negara Tbk (PGN), state electricity company PLN and state fertilizer company PT Pupuk Iskandar Muda (PIM) have offered to buy the LNG from the LNG plant. But Pertamina gave no positive response to the local companies? proposal because they provided no financial guarantee for the construction of the LNG plant.

Medco and Pertamina needed financing from local banks to continue the project because the Japanese bank which had previously agreed to provide the funds, had pulled out from the project.

Medco and Pertamina will need at least US$3.7 billion to finance the project. About $1.7 billion will be needed for the development of gas fields to provide the raw gas supply and another $2 billion for the construction of the LNG plant. (*)