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Keppel to explore small-scale LNG solutions for Indonesia

Singapore’s Keppel Offshore & Marine Limited (Keppel O&M) has signed a Heads of Agreement (HOA) with compatriot Pavilion Energy and Indonesian state-owned PT Perusahaan Listrik Negara (PLN) to explore small-scale LNG solutions in West Indonesia.

The HOA intends to explore opportunities in the development of small-scale LNG value chain to distribute LNG in an economic manner to remote areas in West Indonesia.

LNG can be delivered to floating and onshore LNG terminals using small LNG carriers, where it is regasified and used to generate electricity at PLN’s power plants.

“With a comprehensive suite of solutions for every stage of the gas value chain, including the world’s first floating liquefaction vessel (FLNGV) conversion and the world’s first floating storage and regasification unit (FSRU) conversion, we are able to provide cost effective, end-to-end solutions for our customers,” said Chris Ong, ceo of Keppel O&M.

The HOA followed reports that the Indonesian government may do a LNG swap deal with Keppel O&M, and in the process lower the domestic price of LNG in the archipelago.

Keppel O&M could offer to supply LNG to Indonesia at a price of as low as $3.80 per mmbtu, Coordinating Maritime Affairs Minister Luhut Pandjaitan was quoted as saying, adding that the price includes other benefits, such as storage facilities.

Despite a presidential order last year to cut domestic LNG prices, June prices stood at $5.52 per mmbtu.

The proposed deal to procure fuel supplies for power plants in areas closer to the emerging Southeast Asian LNG hub, could also prove a boon for smaller LNG tankers.

"There is a possibility of a swap [deal] for LNG. We will assess the cost. If it’s cheaper, we will consider [the offer]," said Luhut.

The swap deal would encourage domestic LNG suppliers to become more competitive, he added.

However, conflicting responses came PLN, whose procurement director Supangkat Iwan Santoso said Keppel O&M had only offered to rent out its storage facilities to store LNG from Indonesia, adding that PLN was studying the offer, as the firm was planning to build power plants with a combined capacity of 240 megawatts in Tanjung Pinang and Natuna in the Riau Islands, which are just south of Singapore.

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