Pertamina, Indonesia’s state energy company, has decided not to construct the Bojonegara LNG receiving terminal, proposed for a site to the west of Jakarta. The US$800M project would have provided Indonesia with its second land-based receiving facility.
Although Pertamina has been forecasting sharp increases in Indonesian gas demand after 2020, an abundance of cheap coal and the sluggish development of the country’s gas infrastructure have shown these expectations to be somewhat optimistic, at least in the short term.
Pertamina had been poised to move ahead with constructing the Bojonegara facility in a joint venture with the Kalla Group unit Bumi Sarana Migas (BSM). The Japan Bank for International Cooperation was in line to provide the necessary financing while the engineering unit of Tokyo Gas had agreed to undertake the terminal design work, including for two 160,000 m3 full containment storage tanks.
When Pertamina and BSM signed the terminal heads of agreement (HOA) in April 2015, the project called for a facility able to receive up to 4 mta of LNG and ready to commence operations in 2019. To be positioned at Bojonegara at the western tip of Java, the new terminal was to have fed into the West Java gas grid.
However, the proposed location is about halfway between country’s two existing large-scale floating storage and regasification unit (FSRU) receiving terminals – PGN FSRU Lampung at the southern tip of the island of Sumatra and Nusantara Regas Satu in Jakarta Bay where it serves Jakarta.
Following the HOA, doubts arose as regards the immediate need for another LNG receiving facility in the area, as the distance between the two FSRUs is only 250 km. In October 2016 the project participants agreed to push back the start date to 2020.
The latest decision, to halt the project, does not fully close the door on Bojonegara. According to Pertamina, although the slack demand for gas in West Java does not justify a green light for the terminal at the moment, a rebound in the requirements for gas, particularly from the region’s power generation sector, could prompt a review of the scheme’s feasibility.