Government Promises to Find Buyer for Tangguh Train 3 LNG Before June

KATADATA -  The Indonesian government has promised to make a final investment decision (FID) on the Tangguh Train 3 gas field in the first semester this year. The fate of this refinery project has been hanging in the balance due to uncertainty over a domestic LNG buyer. Director General of Oil and Gas at the Ministry of Energy and Mineral Resources (EMR) I.G.N. Wiratmaja Puja said in the Oil and Gas Building on Friday (1/29) last week that he will look for immediate solutions to finding a domestic buyer that is committed to buying LNG from the field.

Wiratmaja expects to find the buyer before the end of March so that the FID can be made before the second half of 2016. “The FID must be made quickly, possibly this June, because it will only be valid until 2035,” he said. The government wants to use 40 percent of gas from the plant for domestic use.

The government had expected PT Perusahaan Listrik Negara (PLN) to be its biggest buyer. However, the state electricity firm is unwilling to make a written commitment to purchase the gas pending negotiation with the Ministry of EMR. PLN would be able to absorb less than 40 percent of the gas produced by Tangguh Train 3, or the equivalent of 14-18 cargoes.

PLN Procurement Director Supangkat Iwan Santoso said that his company would be able to take 12 gas cargoes from the field. But PLN is unwilling to sign the gas purchase contract pending price negotiations. The state electricity firm currently buys cheaper gas on the spot market. “It’s true that the government wants us to buy domestic gas. But if the price is significantly higher, we’ll have to reconsider,” he said.

With gas prices falling, PLN is looking to renegotiate prices. Meanwhile, the government continues to try to attract other domestic buyers, including former buyer Pertamina, to prevent the gas from being exported, even though several foreign buyers have expressed an interest in purchasing the gas.