Publications

There are two inconvenient truths concerning gas supply from East Kalimantan for Java: 1. The East Kalimantan region has sufficient gas resources to continue to supply export LNG at the full capacity of the LNG processing plants and to satisfy all domestics needs including the Kalimantan to Java gas pipeline project for at least two decades, and 2. The commercial attractiveness of the Kalimantan to Java pipeline project will be enhanced with the construction of the LNG receiving terminal(s) on Java. A tsunami of economic events has combined to perplex evaluation of the pipeline project: 1. Oil price increases 2. Construction cost increases 3. Equipment cost increases 4. Gas demand delay 5. Gas supply impairment. Furthermore, with the extraordinary political attention now directed at Kalimantan gas supply and LNG exports, there will almost certainly be a near term decline in LNG exports to support long term contracts and a LNG receiving terminal(s) will be constructed on Java. Therefore, the revised construction priority for gas supply to Java is: 1. The LNG receiving terminal(s). 2. The pipeline from East Kalimantan to Java. Surprisingly, this solution may yield improved economics to Indonesia as it will facilitate “spot sales of LNG into a hot LNG market and improve capital efficiency.