Integrated oil and gas service provider PT Prime Petroservices (PPS) plans to build a small liquefied natural gas (LNG) plant in Bali this year with a total investment of Rp 3 trillion (US$327 million).
PPS, through its subsidiary PT Indogas Kriya Dwiguna, will build the plant, with a capacity of 300,000 tons per year, on Pagerungan Island, north of Bali, the company's president director, Faiz Shahab, told a media gathering in Jakarta on Monday.
In comparison, an existing LNG plant in Bontang, East Kalimantan, has a capacity of 18.5 million tons per year, while another in Arun, Nangroe Aceh Darussalam, outputs 12.5 million tons annually.
Faiz said the new plant would be the fourth in Indonesia, adding to those in Bontang and Arun, and an ongoing Tangguh project in Papua, which is scheduled to be onstream by the end of the year.
"We hope the project will output its first drop in late 2010," Faiz said, adding that the gas would be used to run two gas-fired power plants, one with a capacity of 113 megawatts (MW) in Pasanggaran and the other a 130 MW plant in Gilimanuk.
PPS finance director Didit A. Ratam said 30 percent of the project funding would come from the company's internal equity, while 70 percent would be garnered through bank loans.
PPS also plans to use the investment to build two LNG receiving terminals in Bali and na LNG carrier ship.
"We are in talks with four EPC (engineering procurement and construction) contractors, but have not decided the winner yet," Faiz said.
He said the plant would help state-power firm PLN reduce its dependence on oil, which has soared to more than $130 per barrel. PLN currently uses diesel in its gas-fired power plants in Bali due to a gas supply shortage.
In an attempt to convert to gas, PLN has signed a gas sales agreement worth Rp 10 trillion with PPS to secure gas supply to its power plants in Bali until 2026.
Faiz said PPS would supply the gas from the Terang, Sirasun and Batur gas fields operated by local oil and gas company Energy Mega Persada.
The company decided to build the LNG plant on the island to avoid reliance on problematic deep-sea pipelines, Faiz said.