SKK Migas Workshop and FGD “Mini LNG Distribution and Utilization”

Figure 1. Discussion Session of “Mini LNG Distribution and Utilization” Workshop.

The construction of natural gas infrastructures in Indonesia has been uneven and slow, which lead to the slow market development. Today, the major end user of natural gas in Indonesia is dominated by the manufacturing sector and power plants, while another sector such as commercials rarely utilizes natural gas for their daily activities. This is due to the stigma that natural gas could only be used by specific companies because of the limited distribution infrastructure and access. In response to the problem, SKK Migas as the government representation decided to promote mini LNG to be developed in Indonesia as the alternative solution since the significant natural gas infrastructures such as pipeline, LNG refinery and regasification plant need a much bigger capital and only cover limited areas. The workshop and FGD were held at City Plaza Building on November 1, 2018. It was attended by the various background of participants from stakeholders to entrepreneurs in order to introduce mini LNG and its market prospect in Indonesia. The event was opened by the Chairman of SKK Migas, Amien Sunaryadi. He argued the importance maximization of natural gas for domestic purpose. In 2018, when the oil price reached USD 100 per barrel, the domestic market tended to proceed from oil to natural gas, it was stated that currently, 60 percent of our natural gas is used for domestic market and 90 percent of them was used for power generations. Despite the rapid increase of natural gas demand, there is a problem in the distribution process on how to transfer LNG from major LNG refineries such as Bontang, Donggi-Senoro, and Tangguh to the Jawa and Sumatra Island as the central location of LNG’s highest demand. He wished that this event could unite entrepreneur from upstream to downstream and create a business opportunity for the development of mini LNG together. This mini LNG project is aimed to reach smaller scale business so that the utility of natural gas for the domestic demand could be rapidly enhanced and well distributed in the market.

The discussion session was lead by Sapto Rahardjo as the moderator, and six invited speakers from various background. There were Chairani Rachmatullah as the Head of the Gas and Fuel Division of PT PLN; four entrepreneurs representative from different companies, Enersindo Heksa Karya, PT Dharma Pratama Sejati, Prajamita Internusa, and PT Laras Energi; as well as Hilton Hotel Bandung as the representation of natural gas end user for commercial purposes. Mrs. Chairani argued that although electricity tariff in Indonesia for the industrial sector is higher than in Malaysia, the electricity tariff for the household sector is still lower in Indonesia. It is due to the fact that PT PLN always prioritizes the cheapest power generations to generate electricity such as coal rather than natural gas, and it is predicted that this trend would stay the same in the last twenty years. For example, there is Muara Tawar Gas Power Generation (PLTG Muara Tawar) which only be used in the peak hour since there are new coal power plants nearby with a much lower price. One advantage of the gas power plant is that it is easy and fast to build compared to the coal power plant. However, the lack of gas infrastructure makes it hard to distribute the natural gas to the gas power plants that resulted with some gas power plant is forced to use another fuel such as high speed diesel (HSD). She wished that the mini LNG development could help to lower the gas price and facilitate the gas distribution.

Four companies with a background in natural gas business also presented their company profile and program, as well as sharing about their experiences. Although the risk and uncertainty are considered high in the LNG business, most of them believe that in the future natural gas would become more important and the demand for it will rise. This time is considered the transition era from fossil fuel to renewable energy. Since natural gas is the energy bridge between fossil fuel to renewable energy, it is the right time to start a natural gas business. Another insight from Hilton Hotel Bandung as one of the natural gas end user from the commercial sector was included in the event. To accomplish its tagline, “Travel with Purpose,” Hilton Hotel Bandung strive to spread benefit to the environment, and one of its programs is to switch from LPG to LNG. This program manages to reduce the 46 ton of carbon emission per year, and for future, it is planned to be adapted in every Hilton Hotel in Indonesia.

Based on the discussion, it was clear that both the entrepreneurs and the consumer sector were having enthusiasm and interest in developing natural gas. However, some problem such as the sustainability of the supply and the price should be well planned and controlled by the government. The development of mini LNG could be an alternative solution, but it should be synchronized with the pipeline development plan to reduce the business risk and uncertainty.

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