Regulatory nod given to long-delayed Donggi-Senoro LNG plan

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Apr. 16 -- Indonesia’s Donggi-Senoro LNG project in Central Sulawesi may be implemented soon, following approval of its development plan by a key government regulator.

Construction of the project, which estimates say will cost $3.7 billion, has been delayed due to an earlier government decision that the site’s gas be used for domestic consumption instead of for export markets.

In particular, the project stalled after Indonesia’s former Vice-President Jusuf Kalla said gas from the Donggi and Senoro fields—which was supposed to feed the LNG plant—should be sold domestically instead of to Japan (OGJ Online, Aug. 10, 2009).

Kalla’s edict led to a delay or possible cancellation of a loan fund previously pledged by the Japan Bank for International Cooperation to build the project.

However, there is no longer problem with implementation of the project, according to Raden Priyono, who heads the country’s upstream oil and gas regulator BPMigas.

Priyono said all requirements set by his agency have been fully met, and that the project now awaits approval only of Indonesia’s Vice-President Boediono.

With no investors showing interest in building the project, Boediono is said to be under pressure to approve the export demands of the project partners: Mitsubishi 51%, Indonesia’s state-owned PT Pertamina 29%, and PT Medco Energy International 20%.
This week’s decision apparently reverses a statement in March by Energy and Mineral Resources Minister Darwin Zahedy Saleh, who said the government had not changed its decision to use most of the gas from Donggi-Senoro for domestic consumption.

Saleh’s denial followed a statement by Hilmi Paniforo, the chief commissioner of Medco Energi Internasional, who claimed to have information that the government would allow 70% of the fields’ gas to be exported.

Last month, Mitsubishi Corp. said it was ready to provide as much as $2.5 billion for the construction of an LNG plant to be built near the Donggi and Senoro fields.

Mitsubishi Chief Executive Yorihiko Kojima made the financial commitment to the long-stalled project during a meeting with Boediono, and Kojima expected that Indonesia would finally approve construction of the facility according to the initial proposals (OGJ Online, Mar. 8, 2010).

Contact Eric Watkins at hippalus@yahoo.com.



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