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New Approach to LNG Infrastructure Will Benefit Indonesia

Subject Matter Expert: Eddy Karmana, Operations Manager, Black & Veatch Indonesia

Recent reports by Indonesian media project a 4 percent annual decline in natural gas production during the next four years.

With the government targeting to make natural gas 20 percent of the national energy mix by 2025, how will the country add about 3,000 billion British thermal units per day (BBTUD) as called for by the Ministry of Energy and Mineral Resources? 

One option is to increase the number of Liquefied Natural Gas (LNG) import facilities to help Indonesia meet its climate and electrification objectives.

 

LNG: Bridge to Indonesia’s Clean Energy Future

Natural gas has long been in Indonesia's energy mix; however, it has always taken a back seat to oil and coal.

Gradually transitioning to natural gas would help Indonesia meet its commitments under the 2015 Paris Climate Change Agreement and stabilize macroeconomic forces by reducing oil imports and the fuel subsidy.

When the Energy and Mineral Resources Ministry eased the maximum cap on gas prices sold to power plants, its goal was to improve economic feasibility for gas and power producers. It was an indication that Indonesia recognized natural gas’ role as an inter-generational transition fuel, with lower carbon emissions than coal. Natural gas is versatile enough to be used in power generation, transportation, and even households.

Industry sources observed that the regulatory update would serve to maximize the procurement of natural gas for gas-fired power plants from local sources at a low price.

EPC for LNG Receiving Terminal and Power Generation

Black & Veatch is currently working on two receiving terminals in India, a country facing similar growing pains as Indonesia. In 2015, a Black & Veatch-led consortium, with KSS Petron India, won the contract for a new liquefied natural gas (LNG) receiving terminal at Ennore, in the Indian state of Tamil Nadu. Black & Veatch is leading the engineering, procurement, construction (EPC) and commissioning work on a turnkey basis.

In 2017, Black & Veatch was awarded an EPC contract for Jafrabad FSRU project's jetty topside and onshore facilities that supports India’s plans to double the country’s LNG capacity. Black & Veatch will deliver critical elements of India's first floating storage and regasification unit (FSRU) liquefied natural gas (LNG) import terminal.

Through our projects, we have found that integrating LNG receiving terminals and gas-fired power plants can provide more than US$50 million in potential savings.

We believe the integrated scheme would benefit the Indonesia market as the entity that bids for the power plant is often the same entity that bids for the LNG receiving terminal. Many local tenders also include both the LNG receiving terminal and the power plant in the same package.

We have been partnering with Indonesia’s oil and gas sector to find new possibilities, including monetizing the country’s stranded gas resources through proven floating liquefaction and modular construction for power generation. We are also involved in the early stages of developing LNG and coal-based fertilizer plants, helping our clients make good investment decisions.

The Indralaya No. 4 Combined Cycle Addition Project (128 MW) is one example where we took on prime EPC contractor roles. We provided traditional, renewable and hybrid power generation and transmission, which were critical to helping the country meet growing demands for electrification.

 

Contact us to learn more about what we can do for you.

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