Pioneers of efficient, high value, modular infrastructures for the global energy and natural resources sectors, AG&P is now building the landmark LNG receiving terminal in South Sulawesi, Indonesia.
To gain exclusive insights into the project and discover the key challenges within the Indonesian gas market, Gastech Insights spoke to Chief Financial Officer and Commercial Head of AG&P, Abhilesh Gupta.
Gastech Insights: Indonesia’s LNG demand has been growing consistently and is predicted to reach more the 7 mmtpa by 2020. What will be the impact of the new Bantaeng South Sulawesi LNG import terminal on the country, and on the industry?
Abhilesh Gupta: The Bantaeng Industrial Park (BIP) is a 3,000-hectare Special Economic Zone that will host nickel smelters for Sulawesi’s prolific nickel mines and for other industries. Three of the four confirmed smelters are co-owned by the Chinese nickel mine owners and together they cater to China’s massive steel industry.
The local government created the industrial zone to nurture the smelter industry to achieve the goal of increasing the value of raw materials. There are 17 potential nickel smelters to be built in Indonesia, of which eight are in Bantaeng, where the power demand is expected to surge to nearly 1,500 MW.
The Bantaeng South Sulawesi LNG import terminal is a landmark project, as it is one of the first private sector LNG receiving facilities in Indonesia that will enhance LNG distribution to these industrial end-users in South Sulawesi and surrounding areas. The Bantaeng project is also expected to unlock break-bulk LNG distribution opportunities throughout eastern and central Indonesia to boost uptake of LNG as a fuel source.
Gastech Insights: AG&P specialises in bringing LNG/natural gas to off-grid markets. What is AG&P’s contribution to this new project in Indonesia?
Abhilesh Gupta: AG&P will develop, build and operate the LNG receiving terminal at the BIP in South Sulawesi, which has an initial terminal capacity of 125 mmscf/d and a send-out capacity of up to 150 mmscf/d. The design includes an FSRU or FSU configuration with a storage capacity of 125,000 m3. AG&P will also develop standardized designs for the terminal using its in-house engineering team and modularly build sections in its manufacturing facilities in Philippines to ensure faster delivery of assets for lower capital costs.
Gastech Insights: What are the key challenges faced by the Indonesian gas sector and how can these be resolved in the next 5-10 years?
Abhilesh Gupta: Natural gas in Indonesia accounts for just 15% of the total energy consumption and this can be enhanced to predicted levels with a sustainable and affordable distribution network to serve the scattered demand centres across the archipelago. The reluctance of customers to switch from their current fuel source, principally diesel, is due to the uncertainty about alternate energy supplies, such as LNG. The national gas pipeline networks and the logistics services outside Sumatra and Java are limited, while break-bulk locations and smaller receiving terminals beyond major hubs are missing.
At the same time, national oil production falls short of demand despite the country’s abundant natural resources that have the potential to power industries, expand energy access in rural areas and support the public and dynamic private sector. Since Indonesia became a net importer of oil, the gap between oil production and consumption has widened, but it expects to increase its gas production by 2020. This could be made possible by coordinating resource-use planning between the public and private sectors and by establishing an effective, well-functioning gas supply chain to increase LNG availability to match diesel and other oil-based distillates.
AG&P can expedite the switch to LNG by bringing to market pragmatic, standardized, end-to-end LNG solutions that are commercially compelling, delivered significantly faster and at lower upfront capital costs. AG&P has developed an LNG import terminal-centric strategy that creates gateways for gas distribution in areas that are currently “dark” – or off-grid - with respect to LNG/gas access. These new gateways will enable LNG, CNG, LPG or gas to be available in smaller parcels for distribution to power, industrial and other off-grid customers that are nearby or up to hundreds of kilometres away.
Share your insights and join the conversation: What are the key opportunities within the Indonesian gas industry? Leave your comment below.
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