Indonesia’s State-Owned Enterprises Ministry has ordered Pertamina to cancel its proposed 3 million mt/year Central Java floating storage and regasification unit (FSRU) project, a senior official with the state-owned oil and gas company said Friday.
This is the second FSRU project to be shot down by the ministry within a month, in what appears to be an effort to streamline the various FSRU projects being planned in the country.
Pertamina has temporarily suspended all work on the project, Gunung Sardjono Hadi, president director of Pertamina Gas, Pertamina’s gas subsidiary, said.
“We are completing the front-end engineering design of the FSRU project, but the tender for the engineering, procurement and construction contract will be halted until it is clear whether we can go ahead with the project,” he said.
Pertamina had originally planned to bring the FSRU on stream by 2013. The company was planning to spend $1.15 billion on the FSRU and associated pipelines linking East Java, Central Java and West Java.
Last month, the ministry asked state-owned gas utility Perusahaan Gas Negara to cancel its proposed FSRU in Belawan, North Sumatra, and only proceed with its planned LNG import project in Lampung, South Sumatra.
The ministry told PGN that conversion of Pertamina’s Arun LNG plant in Aceh to an import terminal could easily supply gas to North Sumatra and that there was no need for another FSRU there.
According to Hadi, the ministry expects the Lampung FSRU to be able to meet demand in Central Java.
The Lampung FSRU could supply gas to Central Java through a South Sumatra-West Java pipeline owned by PGN, Hadi said, adding that a vast pipeline network was also being planned to connect West Java, Central Java and East Java.
“The Lampung FSRU has led to the Central Java FSRU no longer being important, according to state-owned enterprises ministry,” Hadi said.
“However Pertagas will hold a discussion with the Energy and Mines Ministry on gas demand in Java next month to make a final decision on whether the Central Java FSRU is important or not,” he said.
“Some local industries and the Cilacap refinery have shown interest to buy gas from the Central Java FSRU. But we have to calculate the demand comprehensively, including the availability of gas supply in the next five years,” Hadi said.
The government is being forced to evaluate the country’s current FSRU projects for economic reasons, a government official who declined to be named said Friday.
Both the Belawan and Central Java FSRUs are considered not economically beneficial, as other projects are better placed to supply gas to those regions, he said.
Pertagas was in talks with Total and Inpex to buy 900,000 mt/year of LNG from the Mahakam block in East Kalimantan to feed its proposed 3 million mt/year FSRU in Central Java.
Besides the Lampung and Central Java FSRUs, Pertamina and PGN are close to completing a 3 million mt/year West Java facility, which is expected on stream in May this year.
Pertamina is also planning eight mini LNG receiving terminals with a combined capacity of 1 million mt/year expected on stream in the third quarter of 2013.