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 users of natural gas in Indonesia are the manufacturing sector and power plants, while another sector such as commercial 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. To respond 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 backgrounds 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, Mr. Amien Sunaryadi. He highlighted the importance of maximizing natural gas resource for domestic purpose. In 2018, when the oil price reached USD 100 per barrel, the domestic market tended to shift from oil to natural gas. It was stated that 60 percent of our natural gas is currently used for the 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 distribute LNG from major LNG refineries such as Bontang, Donggi-Senoro, and Tangguh to the central location of LNG’s highest demand in Java and Sumatra Islands. He wished that this event could unite from upstream to downstream industry player 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 led by Mr. Sapto Rahardjo as the moderator, and six invited speakers from various backgrounds. There were Mrs. Chairani Rachmatullah as the Head of the Gas and Fuel Division of PT PLN; four gas industry representatives from different companies, namely 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 next twenty years. For example, Muara Tawar Gas Power Generation (PLTG Muara Tawar) can only be used in the peak hour due to the availability of new coal power plants with a much lower cost. 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 the distribution of the natural gas to the gas power plants harder 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 natural gas companies also presented their company profile and programs, 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 its demand will rise. This period 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. From the natural gas end-user perspective, Hilton Hotel Bandung strives to spread benefit to the environment to accomplish its tagline, “Travel with Purpose”. One of its programs is to switch from LPG to LNG and manages to reduce the 46 tons of carbon emission per year. For the future, it is planned to be adapted in every Hilton Hotel in Indonesia.

Based on the discussion, it was clear that both the gas industry and the consumer sector are enthusiastic and interested in developing the natural gas sector. However, some problem such as the sustainability of supply and price should be well planned and managed by the government. The development of mini LNG could be an alternative solution, but it should be aligned with the pipeline development plan to reduce the business risk and uncertainty.

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