The Upstream Oil and Gas Regulatory Task Force (SKK Migas) is preparing two additional liquefied natural gas (LNG) cargoes for PT Perusahaan Gas Negara or PGN. These LNG cargoes will be drawn from the Tangguh Refinery in Bintuni Bay, West Papua.
Hudi Suryodipuro, Head of the Program and Communication Division at SKK Migas, said that PGN has communicated plans to take two LNG cargoes in the third quarter of this year.
“Regarding the price [contract], we are still awaiting offers from PGN, then it will be discussed with sellers and SKK Migas,” Hudi said on Thursday, April 18, 2024.
According to Hudi, the LNG prices will be formulated in reference with the Indonesian crude oil price.
He said further that the additional LNG cargoes are needed to supplement the deficit gas supply from several fields in Central Sumatra, South Sumatra, and West Java regions. Some fields experiencing reduced gas distribution include the Corridor Block, PEP South Sumatra (Regional 1), PEP West Java (Regional 2), PHE Jambi Merang, and several contractor cooperation contract (KKKS) operators in those areas.
Hudi cited that the national gas company is currently exploring options to convert gas sources from pipelines to LNG, which may increase end-user costs due to additional expenses such as vessel, regasification, and transportation costs, if necessary.
Earlier, PGN requested an additional 2 to 3 LNG cargoes in the third quarter of this year.
“PGN’s LNG demand for 2024 is 2 to 3 cargoes. Currently, PGN is in discussions with domestic LNG suppliers, both from Bontang and Tangguh,” PGN Corporate Secretary Rachmat Hutama said on Thursday, April 18, 2024.
He said that the utilization of LNG needed to consider the availability of cargo delivery schedules from producers and the schedule at the Lampung LNG terminal to ensure sustainable LNG utilization. On the other hand, he cited that the company is still in the process of discussing contract prices with LNG suppliers and SKK Migas.
“The process is ongoing, especially regarding logistics and commercial aspects that require preparation and review from all parties. The pricing will be determined by the Minister of Energy and Mineral Resources,” Rachmat said.
The national gas company projects that demand for natural gas in Central Sumatra, South Sumatra, and West Java from 2024 to 2034 will require an additional LNG regasification supply of 73 billion British thermal units per day (BBtud) up to 355 BBtud. This estimate accounts for 12 percent to 54 percent of the total gas supply for PGN customer demand in these three regions.
