Indonesia has started replacing diesel with LNG in dozens of power plants.
This move is set to boost demand for natural gas at one of the world’s top LNG exporting countries.
Following a decade of delays, Indonesia finally launched a $1.5 bill project to distribute LNG on a small scale to power dozens of plants that currently run on diesel, Reuters reported.
PLN EPI, a fuel procurement and transportation operator for Indonesia’s largest power company, PLN, is leading the project.
Last year, Japan’s JERA signed a collaboration agreement with PLN EPI to co-operate in LNG procurement, optimisation, and the development and operation of LNG receiving terminals in anticipation of growing Indonesian demand.
By utilising JERA’s LNG expertise, the Japanese major and PLN EPI will establish an LNG value chain for the power segment in Indonesia, the companies said.
The project will need more LNG supply in the future, and could lead to Indonesia turning to imports later this decade, according to estimates reported by Reuters.
“We are obliged to provide the LNG ... And we are keen on securing more domestic LNG for the project,” Rakhmad Dewanto, PLN EPI Director of Fuels and Gas, told Reuters.
Earlier, Indonesia reportedly asked its buyers to accept delays to LNG cargo exports this year, as the country looked to meet rising domestic energy and gas demand.
Indonesia has one major LNG project planned for later this decade - Abadi LNG.
Japan’s oil and gas producer Inpex owns 65% of Abadi and plans a final investment decision (FID) for the $20 bill Abadi project by 2027.
Abadi LNG has suffered years of delays as design concepts were changed and then reorganised after UK major Shell withdrew from the project nearly two years ago.
The project has received interest from potential buyers to purchase gas from the facility in volumes exceeding the facility’s design capacity, according to Inpex.
