Pertagas, E1 team up to build LPG plant in S.Sumatra

PT. Pertagas, a gas distribution subsidiary of state oil and gas company PT.Pertamina said on Tuesday it would own 66 percent stake at the JV to develop natural gas liquid extraction plant in South Sumatra, with partner South Korean firm E1 Corp. holding the remaining balance.

Pertagas Development and Trading Director Harjana Kodiat told reporters in Palembang, the capital city of South Sumatra, that both parties are now conducting due diligence on Pertamina’s ability to supply gas for the project.

According to Harjana, the plant would be built to have capacity to extract 1,000 tonnes per day of refrigerated LPG and would need feed of 750MMCFD of natural gas. LPG produced could either be sold to domestic market or exported, he said.

E1 would be responsible to set up the project’s financing, he said, adding that JV Company would be set up soon. He said a number of financial institutions including BNP Paribas and Korean banks had offered service to arrange the project's financing. The project would be 70 percent financed by debt, he said.

After gas supply due diligence is completed, the partnership would assign consultant to complete the project's FEED.

Both parties signed the project’s memorandum of agreement (MoA) during President Susilo Bambang Yudhoyono’s visit to South Korea last July.

The project is expected to cost around US$150 million.

Harjana said the project is expected to come onstream in 2010-11.(godang)