State oil and gas company PT Pertamina is set to operate a natural liquefied gas terminal following the conversion of the Arun plant in Aceh in June next year.
Pertamina`s spokesman M Harun said in Jakarta Friday that he has become increasingly optimistic to build the LNG terminal in Arun following a strategic decision of the State Enterprises Minister on the utilization of the plant.
“Based on the decision, Pertamina became committed to complete the project in June next year,” he said. He also said that the Finance Ministry has also issued an agreement in principle of the Arun project in September 2011.
The State Treasurer Director General of the Finance Ministry is now intensively discussing a leasing agreement of the assets.
Earlier State Enterprises Minister Dahlan Iskan decided that gas requirements in Medan, North Sumatra, will be supplied from the conversion of the Arun plant rather than building a floating terminal in Belawan, Medan, because it is cheaper, quicker, and with a positive effect for the people of Aceh. It was planned to shift the floating terminal from Belawan to Lampung.
Harun said that the conversion of the Arun assets will revive the apparent death of industries, such as PT Asean Aceh Fertilizer, PT Kertas Kraft Aceh, Regional Company of Aceh Administration, and the sustainable supplies to PT Pupuk Iskandar Muda (PIM). “This project will also supply gas to PLN and industries in Medan and its surroundings,” he said.
Pertamina, he added, will develop the plant conversion project as a hub terminal for LNG and LPG increasing the national energy resilience.
The LNG plant conversion in Arun will in its early stages have a capacity of 200 MMSCFD and later 320 MMSCFD following the development of the Arun-Belawan pipeline. Investment of the LNG conversion in Arun may reach $73 million in capital expenses and $4 million in operation costs. “These costs are actually lower than building a new floating terminal or leasing it in Belawan,” he said.
Harun said the Arun conversion project has completed its front end engineering design (FEED) in June 2011 and some other facilities and studies at a cost of about only $400,000.
In addition to that, he added, he along with the Road Development Directorate General of the Public Works Ministry and the state railway company PT Kereta Api Indonesia will cooperate in using part of the roads and railroads in building the the pipeline. Under the cooperation scheme a pipeline no longer needs land clearance.
He also said that Pertamina and the Aceh regional state enterprise have discussed a cooperation in utilizing the Arun plant. “Then PIM, PLN, and Pertamina were intensively discussing a scheme on gas utilization arrangements,” he said.
Harun added that the Aceh governor and legislative assembly have given the necessary security guarantee to secure the smooth development of the gas pipeline. “We have reached agreement with representatives of the Aceh administration, community leaders, the youths and Malikussaleh University in November 2011,” he said.
The House of Representatives, he added, has given a recommendation to the Vice Presidential Secretariat to realize the project soon for industrial revitalization and the maintenance of security in Aceh.