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Indonesia's Pertamina diversifying gas market

Publication Date : 04-04-2014

 

PT Pertamina Gas (Pertagas), a subsidiary of state-owned oil and gas giant PT Pertamina, is preparing to increase its gas sales by moving into the sea transportation market.

Pertagas announced on Thursday that it had sealed an agreement with state-owned shipping firm PT Pelayaran Nasional Indonesia (Pelni) over its plan to conduct a study on the possible use of liquefied natural gas (LNG) for the latter’s vessels.

“We want to make this agreement a breakthrough in [promoting] the usage of LNG. Pertagas is quite confident in the marine industry after our successful [collaboration] with the mining industry,” Pertagas president director Hendra Jaya said.

Late last year, Pertagas, PT Nusantara Regas and PT Badak NGL cooperated with mining company PT Indominco Mandiri to carry out a pilot project promoting the usage of LNG as fuel for vehicles used in mining activities.

Pertagas’ optimism in the marine industry is supported by the potential of the sector. Figures from the Indonesian National Shipowners Association (INSA) recorded the number of Indonesian vessels as 12,536 in the first half of last year, a lucrative LNG market for Pertagas.

The number of the locally flagged vessels rose more than 200 percent from only 6,041 in 2005, when the government implemented the cabotage principle requiring all vessels operating in Indonesian waters to be domestically owned.

Pelni president director Syahril Japarin said his company was interested in using LNG for its vessels.

“We are hoping for a positive result from the study so that other sea transportation companies will use LNG in the future,” he said.

Pelni’s fleet uses around 220 million kilolitres of fuel annually, accounting for around 65 per cent of the company’s operational expenses. The company hopes that the use of LNG will help reduce its spending on fuel. It expects to use the savings to purchase vessels or improve other facilities.

However, the realisation of the agreement may take time as both parties have to secure various issues, including LNG supply and infrastructure, according to Pertagas’ Hendra.

“First, we have to determine how to supply the vessels. For example, [ships] on the Jakarta-Medan route, where will their supply come from? Where will the jetty and storage be? We also have to take a look at Pelni vessels’ capacity to use LNG,” Hendra said.

Indonesia currently has three LNG plants, which are located in Arun in Aceh, Bontang in East Kalimantan and Tangguh in West Papua.

Meanwhile, Pelni currently has its main bunkering facilities in Jakarta, Surabaya in East Java and Makassar in South Sulawesi. It also has supporting bunkering in Balikpapan, East Kalimantan; Bitung, North Sulawesi; Kupang, East Nusa Tenggara; Ambon, Maluku; Denpasar, Bali; and Semarang, Central Java.

LNG usage is also expected to reduce the marine sector’s dependency on oil. Currently, most of Pelni’s fleet and fishing boats use subsidized fuel.

The government has been trying to encourage the use of other energy sources, such as gas, so that it will be able to reduce the importation of oil and oil products, which has implications for the country’s current-account balance.

The Upstream Oil and Gas Regulatory Task Force (SKKMigas) has set a target of allocating of 57.3 per cent of total gas production this year to the domestic market, up from last year’s 52.1 per cent.

 

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