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LNG buffer stock unnecessary: Govt

Friday, 03 February 2012 | 00:00
Responding to state gas distributor PT PGN’s suggestion to utilize the Arun liquefied natural gas (LNG) plant in Aceh as LNG buffer stock, the government says Indonesia is not in urgent need of such a storage facility.
The Energy and Mineral Resources Ministry’s oil and gas director general, Evita Herawati Legowo, argued that considering the country’s LNG demand was high, it was not necessary to build such buffer stock because the available gas would be directly absorbed by purchasers.
In addition to that, upstream oil and gas regulator BPMigas spokesman Gde Pradnyana explained that the gas production method was different from oil, which made it harder to be stored. In the gas development scheme, a field would be exploited only after a buyer had been found, he said.
“If there is no buyer, a gas developer will not start production activities. In Japan, they have an underground storage facility, but it was constructed by an LNG buyer, so the buyer was already certain,” he told reporters over the phone on Wednesday.
“At the Tangguh and Bontang LNG plant, the LNG is stored in tanks while waiting for buyers to take it,” he added.
PGN president director Hendi Priyo Santoso suggested during a meeting on Tuesday with the House of Representatives Commission VII overseeing energy that the Arun LNG plant would be better converted into an LNG storage facility.
“We already have stocks of oil fuel, and we should have LNG stock as well. If we don’t have the stock, we’ll be very vulnerable if there are disruptions in shipments,” he told the commission.
The Arun storage would be vital for the country’s energy security, so that if there was an excess of LNG at the Bontang and Tangguh plants, it could be stored at Arun rather than selling it at a spot market, Hendi said.
As reported earlier, state-run oil and gas firm PT Pertamina revealed its plan to convert Arun into an LNG-receiving terminal to supply gas to industries in Aceh and North Sumatra. The company claimed the conversion would be cheaper and more efficient than building a new floating storage and regasification unit (FSRU) in Belawan, North Sumatra, as planned by PGN.
“The investment needed for Arun is only US$80 million, while the FSRU requires around $200 million just for the vessel. An additional cost for the pipeline connecting the FSRU with customers will also be very expensive,” Harun argued.
The conversion aimed to rejuvenate fertilizer and paper industries in Aceh, which currently could not operate to full capacity due to gas shortages, he continued.
Source: The Jakarta Post
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