PAG to complete revitalization of Arun LNG hub in 2018 following lease extension
Tuesday, December 19 2017 - 06:41 AM WIB
The Jakarta Post quoted PAG Director of Finance and General Support Isro Mukhidin as saying Tuesday that the revitalization of a number of facilities including LNG tanks and jetties forms part of expansion drive to help meet growing gas demand in Aceh and North Sumatra provinces.
The company on Monday signed 15-year extension of its current lease over the Arun LNG facility with the State Asset Management Agency (LMAN), allowing PAG to continue as operator of the LNG hub facility until 2032 with an annual payment of around Rp 50 billion, up from the previous fee of Rp 48.6 billion set under the current lease, which is set to expire end of this year.
The extension of the lease will help ensure long-term gas distribution to industries and power plants in the two provinces. PAG has been renting some of the facilities in the Arun LNG complex including six LNG trains since December 2014 under a three-year contract.
?We have extended the lease as we need assurance for our long-term business development in the region,? Isro told The Post.
PAG currently processes LNG from a number of suppliers before delivering around 110 million standard cubic feet per day (mmscfd) of resified gas to two gas-fueled power plants operated by state electricity firm PLN in Lhokseumawe, Aceh, and in Medan, North Sumatra.
The company also supplies 4 to 5 mmscfd of gas to industries in Medan, or one-third of the total industrial demand in the region.
?Energy demand in the region has gradually increased in the past three years, especially for PLN?s power plants. We believe the upward trend will continue in years to come, in line with the increasing electricity consumption,? Isro said.
Elsewhere, The Post said that PAG?s parent company Pertamina also plans to develop a new liquefied petroleum gas (LPG) tank at the Arun terminal with a capacity of 60,000 cubic meters per day to strengthen its LPG distribution in Aceh and North Sumatra. PAG will operate this facility once it is completed.
The Arun facility first commenced operations in October 1978 as an LNG production and export plant. It was initially operated by PT Arun NGL, in which Pertamina held the majority ownership of 55 percent.
However, the facility was eventually converted into a receiving and regasification terminal in 2014 as the gas source for LNG production had been depleted. PAG has since been the sole operator of the terminal.
Pertamina is also in the process of taking over the full operatorship of the Badak LNG plant in East Kalimantan, the country?s oldest LNG facility, inaugurated as it was in August 1977.
At present, the Badak facility is operated by PT Badak NGL, which will see its contract expire by the end of the year. Pertamina holds the majority stake of 55 percent in the company, while the rest is shared between Total E&P Indonesie, Vico Indonesia and Japan-Indonesia LNG Company (Jilco).
Isro said Pertamina was actually slated to sign an agreement with LMAN to fully operate the Badak plant on Monday, but the event was postponed for undisclosed reasons.
?Indeed, we are currently preparing to take over the full operatorship of the Badak plant. There is no doubt that we are ready to do that,? Pertamina gas director Yenni Andayani said in early November.
Data from PLN shows that Indonesia?s annual gas demand for power generation will increase to 2,805 billion British thermal units per day (bbtud) in 2026 from 1,548 bbtud in 2017. (*)