indonesia pgn: in initial lng deal with energy, page-5

Much better translation than other articles I've read.

PGN signs initial LNG contract with EEES
Alfian , The Jakarta Post , Jakarta | Tue, 09/08/2009 12:31 PM | Business

State gas distributor PT Perusahaan Gas Negara (PGN) signed on Monday an initial agreement to purchase up to 5 million metric tons of liquefied natural gas (LNG) per annum from Energy Equity Epic Sengkang Pty Ltd (EEES).

"PGN will receive between 1.5 and 5 million metric tons of LNG per annum *MTPA* from EEES. The LNG is expected to be delivered from 2012 as part of a five-year contract," PGN president director Hendi Prio Santoso said.

Hendi refused to divulge the contract's value, saying the pricing was one of the issues the two companies would finalize later.

Stewart Elliot, CEO of EEES's parent company Energy World Corporation Ltd, said EEES had produced a surplus of gas at its block in Sengkang, Central Sulawesi.The company was also planning to build an LNG plant, he added.

"We will build the LNG plant with a production capacity of 2 MTPA to begin with.

"We will then ramp up the capacity to 5 MTPA," he said.

Elliot added EEES would spend between US$400 million and $500 million to build the 2 MTPA plant.

EEES has been preparing for the plant's permit and putting together its component manufacturing.

"We expect the plant will start operating in 12 to 18 months from now," he added.

Hendi said the LNG would be supplied to PGN's LNG-receiving terminals it was planning to build in West Java and North Sumatra.

As has been reported earlier, PGN and state oil and gas company PT Pertamina have formed a consortium to build the two LNG-receiving terminals in those particular regions.

PGN expected the consortium would come up with the capital expenditure figure required for the projects by the end of this year, Hendi said.

"We expect to complete the projects in the second half of the year 2012," he said.

PGN this year expects to sell between 700 million and 800 million cubic feet per day (MMSCFD) of gas, up from the 578 MMSCFD sold last year.

"As of the first half of the year, we have sold 756 MMSCFD of gas.

"We expect to sell between 760 and 800 MMscfd by the end of this year," Hendi said.

In the first half of this year, PGN gas sales volume rose 37 percent to 756 million cubic feet per day.

The rise in the volume of gas sold boosted the company's net profits, which soared by 135 percent to Rp 3.19 trillion ($319 million).

Earlier this month, Hendi said the company would focus on the development of its LNG business in the future, because transporting gas through pipelines was not cost effective for the majority of Indonesia's gas reserves.

PGN currently operates gas pipelines in Java and Sumatra.

LNG technology only requires gas to be transported on ships, where the gas is frozen before the shipment and then liquefied after it reaches its destination.