Indonesia’s State-run electricity firm PLN said Monday it was sounding out the possibility of securing liquefied natural gas (LNG) supplies from Iran to meet the surge in gas demand from its power plants. PLN power generation and primary energy director Ali Herman Ibrahim said Monday that the company was currently negotiating with a view to making LNG purchases from Iran following its failure to secure gas supplies from Qatar.
A source said PLN had been unsuccessful in its Qatar bid as that country intended to cut production in order to prop up prices on the world LNG market.
Herman added that the state power company was hoping to purchase some 4 million tons of LNG from Iran a year if Iran agreed to sell it at US$5 or lower per million British thermal units.
PLN is planning to build an LNG receiving terminal in Cilegon, Banten, to handle the gas supplies for the company’s power plants in Java, particularly the 740-MW Cilegon power plant.
The Cilegon plant is suffering from a gas shortfall as the existing supplier, ConocoPhillips, is only able to deliver 80 million cubic feet per day out of the plant’s total requirement of 110 million cubic feet per day.
The LNG receiving terminal was previously scheduled for completion in 2008. However the project has been put back due to difficulties in securing gas supplies.
Indonesia is the world’s second largest LNG producer, but its LNG production is only enough to meet its export commitments to Japan, Taiwan and South Korea.
Meanwhile, Energy and Mineral Resources Minister Purnomo Yusgiantoro told reporters Monday that during the recent Association of Southeast Asian Nations (ASEAN) Energy Business Forum in Singapore, Thailand had expressed interests in buying gas from West Natuna to meet growing gas demand from its petrochemical companies in Ranyong.
“The most feasible way of delivering the gas would be by pipeline as Thailand doesn’t have an LNG receiving terminal,” Purnomo said.
Under the Trans ASEAN Gas Pipeline project, the Association already has a pipeline from West Natuna, Indonesia, to Kretek in Malaysia. This pipeline, under the Trans ASEAN pipeline project, is to be extended to Ranyong in Thailand.
However, Purnomo admitted that Thailand had not yet made a concrete offer.
Purnomo had said earlier that the Natuna gas price was expected to be about $16 per mmbtu, much higher than the average gas price, due to the high production costs for the high-carbon dioxide (CO2) gas found in the Natuna D-Alpha block.
The CO2 content of the gas in this block is up to 70 percent, far higher than the 1 percent found in other areas.
State-owned oil and gas firm Pertamina, which has a stake in the block, has said that it was discussing sales of the gas to Malaysian and Thai companies.
ExxonMobil and Pertamina jointly operate the block, and have interests of 24 percent and 76 percent, respectively.
However, the ownership of the block is now in dispute as the government claims that the contract for the development of the block was automatically terminated after no significant progress was made during the agreed exploration period.
Natuna D-Alpha is the largest gas resource in Southeast Asia, with 46 trillion cubic feet of potential reserves.