development of the domestic lng value chain and...
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Development of the Domestic LNG Value Chain and Infrastructure in Indonesia
DNV GL © 2013 SAFER, SMARTER, GREENERDNV GL © 20131
James Brown
Regional LNG and Gas Consulting Manager
DNVGL – Global network through local support
DNV GL © 20132
Existing and forecast LNG fuelled ships and bunkering infrastructure
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50 LNG fuelled ships in operations – 50 more ordered
Existing and forecast of LNG bunkering infrastructure in Japan, Korea and South East Asia
� Korea
– KOGAS is supplying LNG bunkers to Asia’s first LNG
powered passenger ship, Econuri, at Incheon Port.
KOGAS began a trial run on March 7, supplying the LNG
bunkers from Songdo Port in Pohang.
– KOGAS also studied potential locations at Busan and
Pyeontaek. KOGAS is also in discussion with Japan Gas
Association to supply LNG as fuel to vessels operating
on the South Korea-Japan ferry route
� Japan
LNG bunkering facilities in Korea
Busan
Incheon
Pyeongtaek
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� Japan
– Japan's NYK is to build the country's 'first' tug featuring
a dual-fuel engine that can run on either LNG or HFO
built in Japan. Tokyo Gas Co will supply the LNG. No site
has been announced for the LNG bunkering facilities
� Singapore
– Singapore has a strong interest on providing LNG as
fuel. A number of studies have been completed such as
LNG bunkering feasibility studies, LNG bunkering
operational procedures and standards and also, an MOU
was signed between MPA and Port of Antwerp and
Zeebrugge to harmonise LNG bunkering standards
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Singapore
Selection of LNG Studies and Joint Industry Projects
Various Small Scale KNG studies for
S Korea, Middle East & Australia
Opportunities for LNG in the
Philippines and Vietnam
Singapore LNG Bunkering JIP
Cutting edge project investigating
small scale LNG based distributed
power 2012
2013
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power
Small scale LNG market study and
opportunity identification
Assessment of LNG logistics chain
in Indonesia
JIP – Feasibility of the SEA market
for LNG shipping and distribution
Opportunity assessment of the
Southeast Asian market for LNG
shipping and distribution2010
2011
Results of JIP identifying that LNG could increasingly be used to serve power
needs in Eastern Indonesia
Sources: DNV
Figure 1: List of some of the JIP members
2012
Increased deployment of small scale LNG in Indonesia will reduce government diesel subsidies
High cost of electricity
generation in Eastern
Indonesia
Drivers for small scale LNG in Indonesia include:
� Geographical:
� Dispersed islands
� No extensive gas pipeline network
� Political:
� Strong government-led efforts to increase the portion of gas for domestic use
� Heightened government awareness on the need for using LNG to transport gas
� Government expected to reduce local pollution
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PLN’s sales revenues and costs of supply by region in 2005 (in
US cents)
Sources: Interviews, World Bank (2005)
� Government expected to reduce local pollution and CO2 emissions
� Market:
� High price of diesel compared with LNG
� Indonesian fuel subsidies are increasingly costly as electricity demand grows
� Need for distributed power generation
� Technical:
� Proven technical feasibility
� Important facilities such as FSRU soon to be online
DNVGL performed cost-benefit analyses on two LNG supply chain types in Eastern Indonesia
Liquefaction plant
Small-scale LNG ship
(10,000 – 12,000 m3)
LNG storage &
regasification (Satellite
plant)
LNG truckSmall-scale LNG terminal
(Onshore or Offshore)
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Power Plant
FLNGNG pipeline
Small-scale LNG terminal
(Onshore or Offshore)
Small-scale LNG ship
(10,000 – 12,000 m3)
Supply chain options have no one size fits all – risks in each scenario varies and solutions have to
be customized to each locality
2011 study identified 4 potential small scale LNG milk runs in Eastern Indonesia
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Eight Small Scale LNG Import Terminals were identified in 2011 for development
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What is preventing the Domestic Small Scale LNG market from developing?
Technology
Economics
Infrastructure
Finance
Regulation
LNG Sellers
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LNG
Buyers
Regulation
Summary: Opportunities still exist to overcome challenges and succeed with Domestic LNG in Indonesia
� Small scale and domestic LNG has huge potential in Indonesia
� Substituting diesel or HFO at suitable volumes will justify the investment
because the (increasing) price differential exceeds the transport costs
� Many such opportunities exist in Indonesia, driven by geographical, political,
economic and technical factors
� Captive power in particular represents a good opportunity
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� Captive power in particular represents a good opportunity
� Eastern Indonesia has many energy-intensive, isolated mines currently using
diesel or HFO
� Eastern Indonesia has suitable supplies of LNG planned and proposed
� ….but only if we can ‘open valves’ that are preventing infrastructure
development
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Terima Kasih
DNV GL © 2013
SAFER, SMARTER, GREENER
www.dnvgl.com
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James Brown
+65 9725 2704