LNG receiving terminal project on hold until supply secured: PLN

State electricity firm PLN will not proceed with the development of its proposed LNG receiving terminal to be built in the western part of Java until it has reach agreement with LNG suppliers, a company official sad on Monday.

?PLN is currently in talks with BP-operated Tangguh LNG project and a number of overseas LNG suppliers and PLN will hold on (the development plan) until LNG supply is secured,? PLN director Ali Herman Ibrahim said on Monday.

The terminal, with initial capacity to process 3MTPA of LNG is initially slated to commence operations in 2009. PLN had opened pre-qualification EPC tender for the project with a number of companies submitted proposals.

Ali in September 2006 interview claimed that upstream oil and gas regulator BPMIGAS had given its blessing to build another train in Tangguh which would be dedicated mainly to supply PLN.

PLN is planning to build LNG receiving terminal in an effort to secure gas supply for its power plants, which are currently entirely depending on piped gas.

An industry source told Petromindo.Com said that it would be hard for PLN to secure LNG supply without intervention from the government. ?LNG supply market is currently very tight with buyers scrambling for new supply at high price, something that PLN can not afford considering the highest gas prices the company had purchased are below US$4 per MMBTU. PLN would need subsidy or special treatment in order to be able to secure gas from Tangguh. Buying LNG from overseas sources at low price is currently out of question,? the source said. (godang)