PGN to relocate LNG receiving terminal

State gas distribution and transmission firm PT Perusahaan Gas Negara (PGN) is studying to relocate the development of LNG receiving terminal, which it initally planned to build in Situbodo, East Java in 2012.

 

The relocation study is related to destruction of the main gas distributing pipeline due to Lapindo mudflow.

 

PGN’s development director Adil Abbas said in Jakarta on Thursday that uncertainty about the operation of Porong gas pipeline made PGN doubtful to build LNG plant in Situbondo. The company had chosen Gresik and Tuban also in East Java as alternative locations for the LNG terminal but the fixed location would be decided in September 2007.

 

In order to obtain gas supply, PGN is negotiating with the BP-led consortium that owns Tangguh LNG project in Papua and the Cepu oil and gas project. the company also explore overseas markets to anticipate insufficient supply from domestic producers.

 

Selling price of gas from an LNG terminal is quite expensive, that is US$7 per million british thermal unit (MMBTU), whereas the price of gas sold by PGN in East Java is US$5 per MMBTU.

 

“We need to increase the gas price to between $7 and $8 per MMBTU to make the construction of the LNG terminal feasible,” Abbas said on Jan 17. (*)