BP plans RI's first regasification terminal
The Jakarta Post, Jakarta
Energy firm BP Indonesia, the Indonesian unit of Anglo-American energy giant BP PLC, plans to build a liquefied natural gas (LNG) regasification facility to avert gas shortages in West Java.
"The project will be the first LNG regasification terminal in Indonesia and will provide an innovative long-term solution that will complement in situ West Java gas reserves," the company said in a statement made available to The Jakarta Post Wednesday.
The company said the feasibility of the project had been confirmed in studies begun in 1999.
According to the details of the project, a new offshore facility in West Java will be constructed, where LNG shipped by tankers will be stored and regasified.
The gas will then be piped to consumers through offshore transmission facilities.
Construction of the facility is planned to be completed in 2007, and the facility initially will supply 500 million cubic feet per day (MMFCD) of gas.
The terminal will be supplied with LNG mainly from the Tangguh gas field located in the Bird's Head area of Papua.
The cost of the project, estimated at US$380 million including the cost of the pipeline, will be fully funded by private investment.
Gas from the facility will be used to meet new demand arising from economic growth and to back-fill demand from the removal of subsidized diesel fuel.
It is estimated that West Java will face a gas supply shortage of 500 MMCFD by 2005. Currently, power plants owned by state electricity company PT PLN and large industries in West Java consume the diesel equivalent of 600 MMCFD of gas.
The project is expected to result in increased revenue for the government from the development and supply of gas, and reduce the high costs of diesel consumption. Savings from the project are expected to amount to Rp 3.7 trillion per year.
Construction of the new facility will support the government's campaign for the use of gas, aid the development of Papua and strengthen economic ties between the eastern and western regions of Indonesia.
BP and PLN have signed a memorandum of understanding to jointly study the possibility of using the new facility as a gas source for PLN's power plants in West Java, with the study expected to be completed by the end of this year, the statement said.