State electricity company PT Perusahaan Listrik Negara (PLN) is exploring the opportunity to make a gas swap deal with Singaporean energy companies Keppel Corporation and Pavilion Energy to simplify its supply chain and operate more efficiently.
PLN previously signed a memorandum of understanding with the two Singaporean firms to conduct a joint study for the development of several kinds of gas infrastructure, including storage and regasification facilities for liquefied natural gas (LNG) in and around the northern part of Sumatra.
This infrastructure will support the operations of PLN’s power plants in the region, including one with a capacity of 200 megawatts (MW) in Tanjung Pinang and another one with a capacity of 40 MW in Natuna, both in Riau Islands.
“In the initial design for the infrastructure development, we wanted to use LNG from the Bontang refinery [in East Kalimantan]. Then, there was a discussion over the possibility of a swap deal, in which we might be able to take the LNG from Singapore,” PLN corporate planning director Nicke Widyawati said on Wednesday
“The distance to transport the LNG from Singapore is shorter compared to shipments from Bontang. Hence, logically, the swap deal will reduce our logistics costs. However, we still have to review it further.”
In return, PLN will substitute the LNG cargo from its Singaporean partners with, the cargo produced in Bontang. Then, Keppel or Pavilion can use LNG from Bontang to support their operations in Indonesia or in other markets.
“The companies can decide for themselves where they will deliver the LNG from Bontang. But the most important thing is this swap deal has to lead to lower logistics costs for all parties,” said Supangkat Iwan Santoso, PLN’s procurement director.
PLN hinted that the fee to store, regasifi and transport LNG with facilities owned by Keppel and Pavilion might stand at US$3.80 per Million British Thermal Units (mmbtu).
As a comparison, PT Nusantara Regas, a joint venture between state energy companies Pertamina and PGN, sets a fee of $2 per mmbtu for its floating storage and re-gasification unit (FSRU) in West Java.
Meanwhile, Pertamina has set a price of $1.5 per mmbtu for its Arun LNG storage and regasification terminal in Aceh. The price for using these two facilities is lower, but they do not include shipping fees. On the other hand, Keppel and Pavilion can use small vessels to deliver the LNG from Singapore, which is located close to Riau Islands.
Now, PLN expects the government to further discuss and conclude the swap deal during a bilateral meeting between President Joko “Jokowi” Widodo and Singapore Prime Minister Lee Hsien Loong in Singapore on Thursday.
Coordinating Maritime Affairs Minister Luhut Binsar Pandjaitan said the swap deal would encourage domestic LNG suppliers to become more competitive.
“We will assess the cost. If it’s cheaper, we will consider it,” Luhut said.
Previously, he said the government would buy LNG from Singapore to fuel several power plants, including plants in Nias, North Sumatra and Lhoksemauwe in Aceh. Satya Widya Yudha, the deputy chairman of House of Representatives Commission VII overseeing energy, also said "that such a deal, if realized, could lead to lower energy costs, which would eventually boost the country’s competitiveness and economic growth.
Satya Widya Yudha
The government recently launched the 2016-2030 roadmap for gas infrastructure development, estimated to require a total investment value of $48.2 billion. The government will need around 1,100 mmscfd of gas to generate 13,432 MW of electricity under its 35,000 MW program. This program is expected to increase the nation’s electricity reseiye margin to 30 percent by 2019.
Jakarta Post, Page-17, Thursday, Sept 7, 2017
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