Korean firms plan US$2b CNG plant
Rangga D. Fadillah. The Jakarta Post, Jakarta - 01/07/2011
Korea Electric Power Corporation (Kepco) revealed plans for a compressed natural gas (CNG) plant to supply its power plant to be built in Bojonegara, Banten.
Kepco general manager Kim Young Saeng said that the US$2 billion project would benefit both Indonesia and Korea because it provided business expansion opportunity for Korean companies and cheaper electricity for state electricity company PT PLN.
“The investment concept is Kepco with other participating partners – Korea Gas Corporation [Kogas] and Korea National Oil Company [KNOC] – intend to develop small- and mid-sized gas fields, construct CNG transport facilities and install a power plant,” he said at the fourth Indonesia-Korea Energy Forum in Jakarta on Thursday.
The three companies would jointly construct CNG refining and loading systems in the gas fields as well as unloading and storage systems at the power plant, he continued. He added that Korea Trade Insurance Corporation (K-Sure), Infra Fund, the Export Import Bank of Korea and the Japan Bank for International Corporation (JBIC) were ready to finance the planned project.
Saeng said the Bojonegara power plant would have a capacity of 750 megawatts and that PLN would buy electricity from the plant.
“The feasibility study for the CNG projects and gas field selection are expected to be completed this year. We hope that the CNG facility and the power plant can begin operating in 2015,” he said at the forum.
The companies also planned to build an ammonia plant near the power plant, with a total capacity of 0.6 million ton per annum (mtpa). Around 0.4 mtpa of the ammonia would be exported to South Korea, while the remaining 0.2 mtpa would be sold domestically.
The ammonia plant’s construction was expected to start in 2013 and begin operating in early 2016.
Kepco had initially proposed the power plant project in 2003, but due to difficulties acquiring gas supply, the project was suspended. The plant was previously designed to receive liquefied natural gas (LNG).
PLN planning and technology director Nasri Sebayang confirmed that Kepco’s project proposal was not new. However, he added that he was unsure about whether or not the project could be carried out in the near future due to gas shortfall problems.
“As of today, we haven’t seriously considered the proposed project because, if we have a surplus of
gas, we’ll prioritize it for our existing power plants,” he said via text message.
PLN president director Dahlan Iskan announced earlier that his company would need a greater supply of natural gas for its power plants to curb rising costs due to soaring global oil prices. He said PLN had only received 800 mmscfd of gas this year, far below the 1,800 mmscfd it needs.
The Energy and Mineral Resources Ministry’s director general for oil and gas, Evita Herawati Legowo, said she would summon the three Korean companies and other related institutions to discuss which gas fields in West Java could be utilized for the project.
“The companies are ready to handle the project from its upstream to its downstream operation. We’ll also consider providing incentives if necessary,” she said.