PLN interested in Tangguh LNG

PLN interested in Tangguh LNG

Musthofid and Dadan Wijaksana, The Jakarta Post, Jakarta

State-owned electricity company PT PLN says it is interested
in purchasing liquefied natural gas (LNG) from Tangguh LNG plant
in Papua as an alternative supply to meet rising power demands,
particularly in Java and Bali.

Dubbing it as environmentally-friendly, Mulyo Adji, PLN's
corporate secretary, said LNG would be used as fuel for its
future power generators.

"We'll see if it (Tangguh offer) is commercially viable, but
we haven't made contact yet with BP," Mulyo told The Jakarta Post
here last week.

London-based BP PLC is the main shareholder in the Tangguh
project, located in the Bird's Head area of Papua, which is
expected to produce seven million tons of LNG per year when it
starts operation in 2007.

As reported earlier, BP would be looking to Java as a market
for its abundant production capacity.

BP has so far secured one supply contract, that is with
China's province of Fujian, which will buy 2.6 million tons per
year for 25 years from 2007. The contract is worth US$8.5
billion. Philippine energy firm GNPower is also willing to buy
another 1.5 million tons per year, but BP and the firm have yet
to sign a sales and purchase agreement.

BP Indonesia's vice president Satya M. Yudha, who was
contacted separately, said that the discussion on the possibility
of the company entering the Java market was still at a
preliminary stage and that nothing had been officially agreed.

"Basically, we are open to any market, both domestic and
export. We consider Java interesting because of its huge
potential, but we cannot turn a blind eye to other markets,"
Satya said.

PLN appears to have depended on gas quite significantly to
generate a few of its electricity turbines. PLN currently
operates 213 generating units with the capacity of 18,608
megawatt (MW) for Java and Bali consumption. The national
capacity stands at 25,000 MW.

Out of 213 units, 34 are gas-fired power plants, which account
for 24 percent of the total power capacity.

PLN has planned to establish a new power plant in Tanjung
Jati, Central Java, but the plant, which will produce 1,200 MW,
will only start operation in 2005.

Mulyo said that with no new power plants expected to support
the current network until 2005 and with electricity load growth
expected to further rise, Java and Bali are bracing for a
shortage during the period.

Mulyo refused to mention the capacity needed in 2005. However,
data from the Ministry of Energy and Mining Resources shows that
the utilized capacity will be around 20,000 MW with the number of
consumers rising to around 24 million from the current 20
million.