LNG terminal is better than East Kalimantan-Java pipeline: ITS

The Surabaya Institute of Technology (ITS) recommends the construction of an LNG terminal to add gas supplies to East Java, saying it is cheaper to build and more sustainable compared to the planned East Kalimantan-Java pipeline.

Prof. Soegiono, head of the ITS?s LNG study center, said on Monday that the East Kalimantan-Java pipeline would become useless someday once East Kalimantan?s gas fields run out of gas resources..

Meanwhile, he said, an LNG terminal will be usable for a long period of time since it can take gas from various sources.

The country?s oil and gas downstream authority BPH Migas has chosen Bakrie & Brothers as the winner of the right to build the East Kalimantan-Java pipeline. But, more, more people have cast doubt over the feasibility of the project.

Soegiono also noted that the construction of an LNG terminal is much cheaper than the investment needed to build the East Kalimantan-East Java pipeline.

Study by the LNG study center says the East Kalimantan-Java pipeline will cost about US$1.2 billion to build, while investment needed to build an LNG terminal and buy vessels that will deliver LNG to the terminal total $750 million, including $350 million for the construction of the terminal and $450 million for the purchase of two LNG vessels each with the capacity of 138,000 cubic meters.

?The investment could be further cut down if we charter LNG vessels that are now in operation in Indonesia,? he was quoted as saying by Kompas.

Firmanto, a member of the LNG study center, explained that investment to deliver gas through pipeline reach $3.16 per MMBTU, while the investment for LNG delivery is only $1.56 per MMBTU.

Furthermore, Firmanto said, delivery of gas using vessels had proved secure as thus far there is no data regarding incident involving LNG carriers.

On the contrary, the use of pipeline to deliver gas in Indonesia has proved inefficient, citing that the pipeline that transmit gas from Pagerungan to Gresik in East Java can?t now run at full capacity due to the lack of gas supply.

He also noted that East Kalimantan?s gas producers need to supply the Bontang LNG plant to meet its commitment to buyers in Japan, South Korea and Taiwan. (*)