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LNG World Shipping

LNG: Powering growth in Southeast Asia

Mon 04 Mar 2019 by Craig Jallal, tankers and markets editor

LNG: Powering growth in Southeast Asia
The world’s first CNG carrier was ordered for Indonesia but is yet to trade (credit: Wikimedia Accurimbono)]

The Indonesian economy has prospered from LNG imports and is now turning to emerging LNG exporter Mozambique as the next big provider

Indonesia has many of the characteristics associated with an immature LNG import market, despite being an established exporter of LNG. As a country it is nominally self-sufficient in natural gas, but with a booming population and 17,000 islands across which to transport LNG, it has had to develop import facilities to compensate for the energy it cannot supply itself.

Indonesia commenced LNG exports in 1977 and by 1984 had overtaken Algeria to become the world’s leading supplier of the product. In 1988, shipments from Bontang and Arun, the nation’s two liquefaction plants at the time, accounted for almost 40% of the global trade in LNG.

Indonesian LNG exports peaked in 1999, at 28.5 mta, although the country remained the world’s leading LNG supplier until 2006 when Qatar took on that mantle. Since then, declining production at Bontang and Arun has been compensated for by output from the new 7.6 mta Tangguh and 2 mta Donggi Senoro terminals.

Indonesia’s LNG production in 2017 was 18.7 mta (19.9 mta in 2017), of which 2.64M tonnes shipped to domestic terminals. The country’s LNG output is expected to remain stable until at least the early 2020s, and probably for considerably longer. The commissioning of a third 3.8 mta Tangguh train in 2020 will help maintain the nation’s production levels.

However, Indonesia is an emerging economy and is hungry for energy in any form, but especially LNG. Pertamina only made its first LNG shipment to the east of the country in 2017 and has been busy forming alliances with independent suppliers to plug the LNG gap under a mandate from the government. This includes development deals with Woodside, ENI and BP.

Two liquefaction plants are under construction that will require the services of LNG carriers: Senkang LNG, with a contracted capacity of 0.5 mta, due to start production in early 2020; and the aforementioned Tangguh third train.

In addition, Djakarta-headquartered JSK is developing a mini-FSRU which will initially be stationed in Bali. The Karunia Dewata has 26,000 m3 capacity and will regasify around 50M standard cubic feet a day (scf/d). The LR-classed vessel is the first mini-FSRU to be built in PaxOcean’s Zhoushan shipyard and is the largest ship of its type to be built in China. The non-propelled vessel was designed for the installation of four independent type C tanks, each with a capacity of 6,500 m3 and a minimum operating temperature of minus 163C.

"Indonesia is an emerging economy and is hungry for energy in any form, but especially LNG"

“The design is focused on simple and reliable operations in Indonesian waters,” said PaxOcean engineering director Lixin Bian at the launch. The vessel will be put to service in the small-scale supply of LNG within Indonesia’s network of archipelagos, with their often shallow depths.

 

Gas-to-power

Remote locations and stranded gas in Indonesia are the norm rather than the exception, and this was a key factor in the deal offered to a Japanese consortium to construct and operate Indonesia’s – and Asia’s – first gas-to-power project by deploying an FSRU.

An essential element of the Jawa 1 project, the Mitsui OSK Lines (MOL)-managed FSRU will operate in West Java, distributing gas under pressure to a local power plant from its anchorage 14 km offshore in the Cilamaya Sea east of Jakarta. The gas will be sent through a 21-km long pipeline.

The power plant is jointly owned by Pertamina and trading houses Marubeni and Sojitz. At 293-m long and 43-m wide, the vessel, which will be built by Samsung Heavy Industries, will have an LNG storage capacity of 170,000 m3 and a regasification capacity of 300M cubic feet per day.

According to a statement by the consortium partners, the FSRU will feature “the optimal tank and regasification capacity tailored to the plant’s power generation ability.” Co-financiers for Jawa 1 include seven banks. MOL has a central role in the project, which is due to start up in December 2021 and run for a contract period of 25 years.

The Jawa 1 project will be watched closely in a region that most analysts consider to be ripe for FSRUs usually deployed to ‘stranded’ – or smaller – fields, where the cost of a fixed platform is not justified or is at least marginal. “As regions worldwide have comparatively unexpected and smaller gas requirements, FSRUs are projected to meet their demands,” noted energy consultant TMR in early 2019. “The low cost of construction required for FSRUs is another [attraction] that is likely to contribute to the development of the global market in coming years,” it added.

The difficulties involved with remote access can sometimes kill or stall a project. Pertamina recently 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.

However, the proposed location is about halfway between country’s two existing large-scale 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.

However, doubts began to emerge 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.

Project delays in Indonesia are not unusual. Indonesia was on the cusp of a world first with Jayanti Baruna, a 2,200 m3 Compressed Natural Gas carrier (CNG) which was contracted by Pelayaran Bahtera Adhiguna, the Indonesian subsidiary of state power company Perusahaan Listrik Negara (PLN) in 2014. The pioneering vessel is designed to hold natural gas at 250-bar pressure to be transported in 832 vertically-arranged, 12-m high cylinders designed and fabricated by CIMC Enric. The vessel was completed in China in 2016, but has yet to be delivered due to a lack of gas receiving facilities in Indonesia.

Floating LNG

As mentioned above, SHI is constructing a floating LNG vessel for Eni’s Coral FLNG initiative in Mozambique. The 3.4 mta floating production vessel will go on station off the country’s northern coast for 25 years. BP has agreed to purchase the entire output of the Coral FLNG vessel.

Floating LNG production obviates the need for undersea gas pipelines to a shore liquefaction plant when the commercialisation of remote gas fields is being considered. Because FLNG vessels are constructed at specialised facilities, the local labour costs and permitting issues associated with the construction of shore terminals can be avoided.

"Remote locations and stranded gas in Indonesia are the norm rather than the exception"

Despite the use of innovative technologies and the detailed preparation work associated with these inaugural floater projects, the FLNG approach usually translates into shorter lead times and less capital expenditure than is required for traditional shore-based liquefaction plants. The US$7Bn Coral LNG will be 439-m long, 65-m wide and weigh about 210,000 tonnes. It is designed to produce 3 mta of LNG and 480,000 tpa of condensate. The first cargo is scheduled for 2022. It could be that Coral LNG beats Mozambique’s onshore LNG to market.

The onshore project is far larger, consisting of two LNG trains with total nameplate capacity of 12.88 mtpa to support the development of the Golfinho/Atum fields located entirely within Offshore Area 1.

This foundational project paves the way for significant future expansion of up to 50 mtpa from Offshore Area 1. The Golfinho/Atum Project will also supply initial volumes of approximately 100 million cubic feet of natural gas per day (MMcf/d) (50 MMcf/d per train) for domestic use in Mozambique. Anadarko Petroleum Corporation has signed a number of sales and purchase agreements for Mozambique LNG1.

We now see that a former major exporter of LNG is turning to the newest supplier in the field to provide energy to meet its future demands: Anadarko and Mozambique LNG1 has announced it is to supply 1 mta for 20 years to Pertamina.

“Indonesia is expected to be one of the fastest growing natural gas markets in Asia and Pertamina, the national energy company of Indonesia, will play a key role in meeting Indonesia’s long-term energy needs,” said Anadarko executive vice president international, deep-water & exploration, Mitch Ingram. “The Anadarko-led Mozambique LNG project is well positioned to make a sanctioning decision in the first half of this year, as we remain on track to complete the project financing process, secure the necessary approvals, and have executed a sufficient volume of long-term SPAs, which now total more than 9.5 MTPA. We are extremely pleased and grateful to Pertamina for selecting Mozambique LNG to be part of its long-term energy portfolio.”

 

Indonesia LNG Developments
Country Location Exporter(s) Buyer ACQ (Mtpa) Start date End date Delivery format
Indonesia Bontang Pertamina. ENI Muara bakau Pertimina 1.4 2016 2021 FOB
Indonesia Bontang Pertamina. IDD Bangka Pertimina 0.2 2016 2021 FOB
Indonesia Bontang Pertamina. Total E&P. Chevron.  Vico CPC 1.8 1998 2017 DES
Indonesia Bontang Pertamina. Total E&P. Chevron.  Vico KOGAS 1.0 1998 2017 FOB
Indonesia Bontang Pertamina. Total E&P. INPEX JERA et al** 2.0 2011 2020 DES / FOB
Indonesia Bontang Pertamina. Total E&P. INPEX Nusantara Regas 1.5 2011 2022 FOB
Indonesia Tangguh  Tangguh PSC Contractor Parties CNOOC  2.6 2009 2033 FOB
Indonesia Tangguh  Tangguh PSC Contractor Parties Kansai Electric 1.0 2014 2035 DES
Indonesia Tangguh  Tangguh PSC Contractor Parties PLN  1.5 2015 2033 DES
Indonesia Tangguh  Tangguh PSC Contractor Parties Posco 0.6 2005 2033 DES
Indonesia Tangguh  Tangguh PSC Contractor Parties Sempra LNG 3.7 2008 2029 DES
Indonesia Tangguh  Tangguh PSC Contractor Parties SK E&S 0.6 2006 2026 DES
Indonesia Tangguh  Tangguh PSC Contractor Parties Tohoku Electric 0.1 2010 2024 DES
Indonesia Donggi-Senoro PT Donggi-Senoro LNG JERA 1.0 2015 2028 DES
Indonesia Donggi-Senoro PT Donggi-Senoro LNG KOGAS 0.7 2015 2028 FOB
Indonesia Donggi-Senoro PT Donggi-Senoro LNG Kyushu Electric 0.3 2015 2028 DES
New developments            
Indonesia Tangguh  BP PLN 1.0 2020 2035 DES
Portolio   Woodside * Pertimina 0.6 2019 2039  
Indonesia Bontang Pertamina. ENI Muara bakau ENI 1.0 2017 2024 FOB
Indonesia Bontang Pertamina, ENI Muara bakau ENI 1.0 2017 2027 FOB
Indonesia Bontang Pertamina, ENI Muara bakau Pertimina 1.4 2017 2024 FOB
Portolio   ExxonMobil (Heads of Agrreement stage) Pertimina 1.0 2020s 2030-2040 DES

Notes: ACQ = Annual Contract Quota: DES = Delivery Ex Ship, FOB = Free On-Board: *There are provisions allowing the volume to increase up to 1.1 MTPA from 2024 to 2038:** = JERA. Kansai Electric. Kyushu Electric. Nippon Steel Corporation. Osaka Gas.Toho Gas

         
Source: GIIGNL            

 

Malaysia LNG Developments
Country Location Exporter(s) Buyer ACQ (Mtpa) Start date End date Delivery format
Malaysia Bintalu Malaysia LNG, Satu Hiroshima Gas 0.10 2016 2026 FOB
Malaysia Bintalu Malaysia LNG, Satu JERA.Tokyo Gas 7.40 1983 2018 DES / FOB
Malaysia Bintalu Malaysia LNG, Satu Saibu Gas 0.45 2014 2028 DES / FOB
Malaysia Bintalu Malaysia LNG, Satu Shikoku Electric 0.36 2010 2025 DES
Malaysia Bintalu Malaysia LNG, Dua CPC 2.00 1995 2020 DES
Malaysia Bintalu Malaysia LNG, Dua Gas Bureau. City of Sendai 0.15 1997 2018 DES
Malaysia Bintalu Malaysia LNG, Dua JERA  0.54 2011 2031 DES
Malaysia Bintalu Malaysia LNG, Dua JX Nippon Oil & Energy Corporation 0.38 2015 2025 DES
Malaysia Bintalu Malaysia LNG, Dua KOGAS  2.00 1995 2018 FOB
Malaysia Bintalu Malaysia LNG, Dua Shizuoka Gas 0.33 2016 2025 DES
Malaysia Bintalu Malaysia LNG, Dua Tohoku Electric 0.37 2016 2026 DES
Malaysia Bintalu Malaysia LNG, Dua Tokyo Gas 0.90 2015 2025 DES
Malaysia Bintalu Malaysia LNG Tiga CNOOC  3.00 2009 2029 DES
Malaysia Bintalu Malaysia LNG Tiga Japan Petroleum Exploration Co. 0.48 2002 2021 DES
Malaysia Bintalu Malaysia LNG Tiga KOGAS  2.00 2008 2028 DES
Malaysia Bintalu Malaysia LNG Tiga Osaka Gas.Toho Gas. Tokyo Gas 0.68 2004 2024 DES
Malaysia Bintalu Malaysia LNG Tiga Toho Gas 0.52 2007 2027 DES
Malaysia Bintalu Malaysia LNG Tiga Tohoku Electric 0.50 2005 2025 DES
Malaysia Bintalu Malaysia LNG Osaka Gas 0.80 2009 2023 DES
New developments          
Malaysia   Malaysia / MLNG / Petronas Hokkaido Electric Power 0.1 2018 2028 DES
Portolio   Malaysia / MLNG (Heads of Agreement) JERA 2.5 2018 2021 FOB/DES
Notes: ACQ = Annual Contract Quota; DES = Delivery Ex Ship, FOB = Free On-Board          
Source: GIIGNL            

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