Pertamina signs LNG agreement with Pelni

PT Pertamina Gas (Pertagas), a subsidiary of state owned oil and gas firm PT Pertamina (Persero), has signed a Memorandum of Understanding (MoU) with state-owned shipping company PT Pelni to study on the use of LNG as fuel for ships.

Pertagas said in a statement the MoU marked its fresh entry into the national shipping industry as a potential new market for LNG.

At present, Pelni uses subsidized diesel oil as fuel to operate its armada. The firm needs 219 million tons of diesel oil per year and the fuel accounts for 65 percent of its operating costs with main bunkering in Jakarta, Surabaya, Makassar and supporting bunkering in Balikpapan, Bitung, Kupang, Ambon, Denpasar and Semarang.

With the use of LNG, Pelni will be able to significantly cut its fuel costs and can use the saved fuel costs to expand its armada and improve its infrastructure.

Pertagas chose to supply LNG rather than CNG for Pelni because the former is easier to transport and need a smaller storage room in ships, according to Pertagas.

?This is a strategic initiative of Pertagas and Pelni in the framework of state owned enterprises synergy,? Pertagas? President Director Hendra Jaya said.

?This cooperation is a pioneer one for the use of LNG as fuel in ships in Indonesia. We hope the result of the study will be positive so that not only Pelni but also other shipping companies will use LNG as fuel,? Syahril Japarin, Pelni?s President Director, said.

The national shipping industry is a potential lucrative market for LNG. Since the implementation of cabotage policy on March 31, 2013, the national shipping armada has rose by 99.2 percent to 12,047 units and the number of operating permits issued by the government for shipping companies has been increasing each year.

Hendra hoped that the country?s fishermen will also use LNG in their boats in the future, rather than subsidized diesel oil as they do now.

Editing by Johannes Simbolon