BPMigas says Arun LNG plant conversion project in limbo

JAKARTA. The government has not approved state oil and gas firm PT Pertamina’s plan to convert Aceh’s Arun liquefied natural gas (LNG) plant into a receiving-and-re-gasification terminal, an official says.

Upstream oil and gas regulator BPMigas vice chairman Hardiono said on Tuesday that Pertamina had not received a response to a letter it sent to the government explaining its plan for the Arun LNG plant.

“The plant is a state asset therefore the approval for the conversion must come from the Finance Ministry. Discussions are still underway,” he told reporters after visiting Arun block operator ExxonMobil’s office in Jakarta.

ExxonMobil previously announced it would sell its stake in the block.

Hardiono called on the government to re-think its earlier approval of state gas distributor PT PGN’s plan to build a floating storage-and-re-gasification unit (FSRU) in Belawan, North Sumatra, with a total capacity of 140 million metric standard cubic feet per day (mmscfd).

Pertamina senior vice president for gas, Nanang Untung, said converting the Arun plant into a receiving terminal would be cheaper than building a new FSRU, as Pertamina would only need to build a re-
gasification facility. A FSRU would require more expensive facilities, such as a port.

“The investment needed to build a re-gasification facility is only US$80 million,” Nanang said.

The capacity of the receiving terminal could be adjusted to demand in Aceh and North Sumatra, he added.

Pertamina said in a press statement released on Monday that it had made arrangements to proceed with the conversion, including fixing an agreement to supply gas to state power company PT PLN and state fertilizer producer PT Pupuk Iskandar Muda (PIM).

Pertamina said the agreement was supported by former PLN president director and current State-Owned Enterprises Minister Dahlan Iskan.

The company has also received support from the Lhokseumawe administration in Aceh and the Aceh and Papua Special Autonomy Supervisory Team, which is led by House of Representatives Vice Chairman Priyo Budi Santoso.

However, Pertamina does not have an LNG supplier for Arun. The company has asked the Energy and Mineral Resources Ministry for an LNG allocation from the Tangguh LNG plant in Papua.

“We really expect a positive response from the ministry so that the project can proceed,” Pertamina spokesman Mochamad Harun said.

The gas from the proposed receiving terminal would support the development of Aceh by revitalizing dead industries such as PT ASEAN Aceh Fertilizer, paper maker PT Kertas Kraft Aceh and other local enterprises, Harun said.

“We hope that we can start the pre-qualification tender in the first quarter of this year. Therefore the terminal could begin commercial operation in June 2013.” Harun added. (Rangga D. Fadillah/The Jakarta Post)