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Indonesia's Pertamina may shelve Central Java FSRU proposal

04 May 2012 10:45:44 | glm

Indonesia's state-controlled oil and gas company Pertamina has been told to abandon plans for its central Java floating storage and regasification unit (FSRU) as the government moves to streamline the number of projects in the country.

Work has been suspended on the 3m tonne per annum (mtpa) receiving facility, although a spokesperson from Pertamina said that, as yet, the company "had not received formal notification from the government regarding the case".

"The FSRU is in the finalisation stage of the tender. Onshore Regas Facilities [ORF] is in preparation to tender, and the subsea pipeline is at the FEED [front end engineering design] stage," the spokesperson added.

The project has been plagued by delays. After an unsuccessful attempt in the fourth quarter of 2011, Pertamina moved to re-issue the tender to develop the FSRU in the first quarter of 2012.

Bids from Norwegian shipping companies Höeg and Golar, US-based Excelerate Energy and South Korea's Samsung Heavy Industries were heard to have been received, and the company had planned to announce the winner in April before beginning operations in early 2013.

Pertamina had planned to spend nearly $2bn on the FSRU, which would feed the Tambak Lorok power plant - operated by Indonesian state electricity generator PLN - as well as a planned PLN power plant in east Java.

The decision to shelve the project was widely thought to have been taken following the government's recent move to relocate state-owned gas utility PGN's proposed FSRU in Belawan, north Sumatra, to Labuhan Maringgai, on the southeast coast of Sumatra.

The new location will enable PGN to pipe gas from the Labuhan Maringgai facility to east Java by means of two existing subsea pipelines, which are owned and operated by PGN. This is deemed sufficient to supply the island, removing the need for a separate FSRU on Java.

A final decision is expected to be taken this month as to whether the central Java FSRU will be necessary, as numerous local industries had shown interest in buying gas from the facility.

When asked if the facility would be relocated, the Pertamina spokesperson said; "We haven't yet considered any other location for since central Java is still the best option for supplying gas demand on Java Island."

The company had been in talks with French oil and gas major Total and Japanese producer INPEX to buy 900,000 tonnes per annum of LNG from the Mahakam block in East Kalimantan to feed the proposed Central Java facility.

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