PLN hopes to commence construction of W. Java LNG receiving terminal next year

State electricity firm PLN said it hoped to be able to commence construction of LNG receiving terminal and re-gasification facilities in West Java late next year as part of strategy to shift cheaper natural gas and to provide supply security for its gas supplies.

PLN director Ali Herman Ibrahim told reporters Tuesday that engineering study on the facilities would be completed in January next year. PLN assigned engineering firm Kellog Brown & Root to conduct the study.

He said that the facilities would be built in two stages with first stage planned to be able to handle 400 MMCFD of gas per day or 3 million tons of LNG per year, ramping up to 800 MMCFD. He added that the plant is expected to be completed in 2007.

Ali estimated the investment needed to build the first phase receiving terminal at around US$ 300 million.

?The LNG receiving facilities will provide cheaper energy source compared to fuel oil as well as gas supply security to complement pipeline gas. That?s why PLN urgently needed the facilities,? said Ali. He further added that the LNG could be sourced from any LNG producers in Indonesia.

Ali said PLN would seek partner to develop the facilities. ?We surely want LNG producers such as BP Plc. or state gas distribution company PGN to be involved in the project, but thus far we don?t have any firm deal with third parties,? said Ali. He also said that thus far, PLN had yet in negotiation with LNG producers to secure LNG contracts. ?There?s still plenty of time,? he said.

Beside PLN, PGN is also conducting studies to develop LNG receiving terminal in West Java and east Java.

PLN is Indonesia?s largest gas consumer with increasing consumption due to the planned construction of new power plants, and the company?s strategy to shift from fuel oil to gas.

According to Ali, PLN would spend Rp. 3.5 trillion (US$ = Rp.8,500)to buy gas and Rp.13 trillion to buy fuel oil next year. (alex)