UPDATE 1-Indonesia's Pertamina, PLN to build 8 mini LNG receiving plants

JAKARTA, March 24 Thu Mar 24, 2011 2:48am EDT

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JAKARTA, March 24 (Reuters) - Indonesia's state energy firm Pertamina and state power firm PLN said on Thursday they plan to build 8 mini liquefied natural gas (LNG) receiving terminals in eastern Indonesia, with a total capacity of 1.4 million tonnes a year.

The plants, added to three already planned on the islands of Java and Sumatra, show that the world's No.3 LNG exporter is focused more on ensuring future domestic supplies as output wanes, meaning exports are likely to keep falling.

"I expect the projects will secure gas supply for PLN's operations in eastern Indonesia and will be part of a more integrated gas business for PLN's interests," said Karen Agustiawan, Pertamina's chief executive.

The firms will carry out pre-feasibility studies for the projects, aimed at taking cargoes of the super-cooled gas to return them to natural gas for use by local industries. The firms declined to give investment figures.

Southeast Asia's biggest economy is seeing growing gas demand, and a commodity boom has increased economic growth around the archipelago in places such as coal-rich Kalimantan.

Its exports of LNG, the third largest after Qatar and Malaysia, will fall to 362 cargoes this year from 427 in 2010.

Agustiawan said mini LNG plants would be a solution for gas needed in the scattered islands of eastern Indonesia, where it would be difficult to construct a gas pipeline.

The first phase of building aims for see four terminals by the end of 2012, two in east Kalimantan, one in Bali and one in southern Sulawesi, to receive LNG from Pertamina's Bontang export LNG plant that is supplied by a Total field.

Bontang's output is expected to fall 6 percent this year, though Indonesia is considering sending surplus cargoes from 2010 to Japan to make up for its loss of nuclear power after the recent tsunami.

Two more mini receiving terminals, in Lombok and southern Kalimantan, are expected to be onstream in 2013, with the last two in Sulawesi and Maluku islands by 2015, though delays are common in Indonesia's energy industry.

PLN said the projects would help the company reduce fuel costs by 874 billion rupiah ($100 million) per year. The terminals are also expected to supply gas for state miner Antam's power plant in southeast Sulawesi. ($1 = 8721.5 Rupiah) (Reporting by Alfian; Editing by Neil Chatterjee)

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