Anglo Euro Energi Indonesia discusses US LNG and Indonesia’s LNG industry

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Alan Yogi Lau, President Director , Anglo Euro Energi Indonesia, PT
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In this interview with Alan Yogi Lau, President Director at Anglo Euro Energi Indonesia, PT, we talk about US LNG and find out more about Indonesia’s LNG industry including the development of Arun as a key LNG Hub, and the country’s challenges in terms of gas and power infrastructure.

Gastech News: We have recently heard that Anglo Euro Developers (S) Private Limited has signed an MOU with SCT&E LNG for a 20 year fixed price natural gas agreement. Why is this offering a first of its kind among US LNG export projects?

Alan Yogi Lau: Natural gas fixed price for 20 years is a new paradigm in LNG pricing. Presently, LNG price is based on an oil-indexed daily assessment on FOB or DES delivery basis. SCT&E LNG is a tolling facility, charges fixed liquefaction, O&M and fuel retainage fees. By having an upstream producer to supply natural gas at fixed price (including pipeline transportation) to SCT&E LNG site in Louisiana, USA, Anglo Euro Developers is able to offer a fixed price natural gas supply commencing approximately 2023. There is 530 mmscfd of natural gas to offer under this arrangement.

Gastech News: What are the prospects for a second wave of LNG exports post 2025?

Alan Yogi Lau: There is rapidly growing demand for LNG worldwide, though currently till 2019 there is an oversupply situation. Post-2025 demand is expected to surge due to exponential growth for energy and stricter carbon, emission control and regulations. LNG is clean energy and is cost-effective and will play an increasing role in reducing greenhouse gas emissions globally.

Gastech News: What do you expect to see in terms of gas and power infrastructure development in Indonesia this year?

Alan Yogi Lau: Demand for gas and power in Indonesia is huge, 35GW of power to be developed (25 percent gas to power projects), however, policies, regulations, issues such as tariffs, coordination between Ministries and State-owned enterprises and between Provincial and Central Government are still a work in progress. These issues need to be addressed including infrastructure projects financing, for Indonesia to experience an increase of infrastructure development activities next year onwards.

Gastech News: How do you overcome these issues?

Alan Yogi Lau: The Indonesian Government has strong Political Will, all issues can be addressed through proper channels and solutions propose through open dialogue with the relevant departments and Ministries.The Government has good ground level, practical understanding and is definitely on right track.

Anglo Euro Developers through its subsidiary PT Anglo Euro Energi Indonesia shall be establishing an infrastructure project finance platform for energy projects including power generation and LNG.

Gastech News: We know PT Anglo Euro Energi Indonesia is involved in the development of Arun as a key LNG Hub, what are the main challenges you are facing at the moment?

Alan Yogi Lau: We are focused on supplying small demand centres (0.5 -1 mtpa) not only within Indonesia but to east coast of India, Bangladesh, Myanmar and the Philippines.

Some challenges we're facing at the moment are the excessive and inappropriate tariff structures regarding import and export of goods. Furthermore, there is lack of infrastructure such as storage facilities at receiving terminals and distribution systems in east coast of India and Bay of Bengal countries.

It's also a challenge to get power plant owners and industrial end users utilising fossil fuels and coal to switch to gas. However, the main challenge is the lack of capacity building for infrastructure project development financing mainly due to localised counter-party risks, inadequate due diligence considerations to structure bankable projects and lack of Government readiness to issue guarantees to support infrastructure projects throughout the project lifecycle.

Image: LNG supply to small demand centres through break bulk services in Arun (please click on the image to view the larger version).

Gastech News: What is the solution for infrastructure development funding?

Alan Yogi Lau: Besides the traditional approach of private initiatives through loans from commercial banks, we are initiating public-private partnerships projects throughout Asia. Bankable structures are needed to meet due diligence process of commercial banks, institutional funds, and multi-lateral agencies such as Asian Development Bank, World Bank Group and Islamic Bank. PPP framework can be utilised to develop gas infrastructure projects such as LNG Storage and Terminal Projects, LNG Vessels, Transportation and Gas Distribution Infrastructure.

Anglo Euro Developers is an accredited training organisation for PPP via CP3P Certified PPP Professional Training Program, an innovation of the World Bank Group, Asian Development Bank, Inter-American Development Bank, European Bank of Reconstruction and Development, and Islamic Bank.

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