Indonesian gas, electricity firms plan LNG terminal

JAKARTA, Dec 14 (Reuters) - Indonesia's gas distribution firm PT Perusahaan Gas Negara (PGN) PGAS.JK and electricity firm PT Perusahaan Listrik Negara (PLN) plan to jointly build a liquefied natural gas (LNG) terminal on Java island, a senior PGN official said on Friday.

PLN and PGN had said previously that they would build separate LNG terminals, or regasification projects, at a cost of around $400 million for each terminal to secure future gas supply to power plants and industries on Java.

Indonesia, Asia-Pacific’s only OPEC member, is increasing its use of energy sources such as natural gas in a bid to reduce oil use because of high prices and dwindling domestic supply.

“We plan to build the LNG terminal in cooperation between PLN and PGN with possible capacity of 1.5 million tonnes per year,” Sutikno, PGN president director, told reporters. “PLN and PGN are still in talks at the moment. The cooperation is for efficiencies. The terminal is expected to be built on Java island,” he added.

Sutikno said the capacity could be higher as it depend on the availability of the gas.

“We will talk to gas producers in the country, including with Total and BP,” he said.

He gave no time frame as to when the project would be built.

Total TOTF.PA is the biggest natural gas producer in Indonesia, supplying around 2.6 billion cubic feet per day of natural gas to Bontang LNG plant.

British oil giant BP.L has invested in a $5 billion LNG project in Tangguh, West Papua province. Tangguh is due to produce 7.6 million tonnes of LNG a year from October 2008.

Indonesia is the world’s second-largest producer of LNG after Qatar but production is expected to fall by 4 percent next year, while exports may fall even further as it seeks to divert more gas to the domestic market.

The country is estimated to have gas reserves of around 182 trillion cubic feet.

Reporting by Muklis Ali, editing by Sara Webb