Low gas price hampers PGN's LNG terminal project

Low gas price at the domestic market has hampered the construction of state owned gas distribution company PGN's liquefied natural gas (LNG) receiving terminal in Tuban, East Java.

PGN's director for operation Adil Abbas said in Jakarta on Wednesday that with the current gas price of about US$5 per mmbtu, the construction of the LNG terminal was not economically viable.

"We need to increase the gas price to between $7 and $8 per mmbtu to make the construction of the LNG terminal feasible," he said.

PGN said earlier that it planned to build a LNG receiving terminal in Tuban, with a capacity of between 1.5 million and 2 million tons to meet the surge in the gas demand in East Java.

The construction of the LNG terminal, according to PGN, would cost about US$500 million to build. (*)