Study on Opportunities and Issues

in introducing mini LNG facilities and

equipments in Indonesia
Final Report

Nomura Research Institute

Contents
List of Graphs and Tables ............................................................................................... iv
List of Graphs .............................................................................................................. iv
List of Tables ............................................................................................................... vi
1.

2.

Introduction ...............................................................................................................1
1.1.

Background .........................................................................................................1

1.2.

Aim and objectives ..............................................................................................2

Methodology ...............................................................................................................3
2.1.

Scope of the project..............................................................................................3

2.2.

Scope of study ......................................................................................................4

2.3.

Applicable technology .........................................................................................5

2.3.1.

ISO Containers.............................................................................................5

2.3.2.

Satellite facilities..........................................................................................6

2.3.3.

Mini LNG Tanker ........................................................................................7

2.4.

3.

Study methods ....................................................................................................8

2.4.1.

Interviews.....................................................................................................8

2.4.2.

Workshops ....................................................................................................9

Results......................................................................................................................10
3.1.

Japanese experience .........................................................................................10

3.1.1.

Import and transport of LNG in Japan .....................................................10

3.1.2.

LNG and cool heat of LNG use in Japan...................................................17

3.2.

Current situation in Indonesia .........................................................................22

ii

3.3.

4.

3.3.1.

Technical regulation on min-LNG transpor faciliteis and equipments ....26

3.3.2.

Safety regulation ........................................................................................26

3.3.3.

Road space limitation.................................................................................27

3.4.

Role of each participant ....................................................................................28

3.5.

Reference scenario setting ................................................................................30

3.6.

Monitoring methods ..........................................................................................31

3.7.

Promotion activities like seminars for Indonesian stakeholders.....................33

Analysis ....................................................................................................................34
4.1.

5.

Regulation(s) and policy(ies) related to the project ..........................................26

Business plan ....................................................................................................34

4.1.1.

Project location ...........................................................................................34

4.1.2.

Sangatta case description ..........................................................................35

4.2.

Proposed over all implementation schedule .....................................................46

4.3.

Policy implication ..............................................................................................48

4.3.1.

Contribution to Indonesian Sustainable Development.............................48

4.3.2.

Capacity building to the host country .......................................................48

Conclusion and Next Steps......................................................................................49

5.1.

Conclusion .........................................................................................................49

5.2.

Next steps ..........................................................................................................49

iii

List of Graphs and Tables

List of Graphs
Figure 1 Project scope in the value chain ..................................................................3
Figure 2 Specification of ISO containers ...................................................................5
Figure 3 Example of site design of mini satellite facilities .......................................6
Figure 4 Mini LNG tanker.........................................................................................7
Figure 5 History of LNG Import amount in Japan .................................................10
Figure 6 Location map of LNG receivable tanks in Japan .....................................11
Figure 7 Current situation of the distribution of satellite facilities and gas
transport network .............................................................................................12
Figure 8 Image of Satellite transport system .........................................................13
Figure 9 Distance of land satellite transport system in Kanto region in Japan ....14
Figure 10 Distance of railway transport between satellite facilities and receivable
terminal .............................................................................................................15
Figure 11 Example of multi modal transport of LNG using mini-LNG tanker and
lorries.................................................................................................................16
Figure 12 General examples of LNG and cool heat of LNG use .............................17
Figure 13 Number of net accumulated installed units of cogenerations system ...21
Figure 14 Number of net accumulated installed capacities of cogenerations system
...........................................................................................................................21
Figure 15 Indonesia dry natural gas production and consumption 2002-2012 .....23
Figure 16 Primary energy demand in Indonesia by fuel ........................................23
Figure 17 Map of LNG facilities in Indonesia .........................................................24

iv

Figure 18 Road map to commercialization..............................................................25

Figure 19 Milestone LNG Filling Station & LNG Receiving Terminal
Infrastructure for LNG For Mining Project .....................................................25
Figure 20 Considerable local partners ....................................................................28
Figure 21 Seminar presentation..............................................................................33
Figure 22 Project location ........................................................................................34
Figure 23 Location of Sangatta ...............................................................................35
Figure 24 Capacity of power generation and peak demand of electricity in
Sangatta (PLN know only) ...............................................................................36
Figure 25 Power generators near Sangatt within 20km from Sangatta city area.37
Figure 26 Captive power generators owned and operated by Kutai Timur
government in Sangatta ...................................................................................38
Figure 27 ISO container manufactured by Chart ...................................................42
Figure 28 Type of technology of ISO container for mini-LNG transport ...............42
Figure 29 Technical comparison among three type of ISO containers ...................43
Figure 30 CO2 emission reduction amount calculation..........................................44
Figure 31 Service supply scheme ............................................................................45
Figure 32 Steps of implementation of trial stage ....................................................46
Figure 33 Ideal schedule of implementation ...........................................................47

List of Tables
Table 1 Scope and contents of study..........................................................................4
Table 2 List of interviewees and interview items .....................................................8
Table 3 Refrigerated warehouse using cool air from LNG terminals ..................18
Table 4 Production of Liq. N2, O2 and Ar. from Air.............................................18
Table 5 Production of Liq. CO2 gas and Dry ice from emission gas from oil
refineries in Japan ............................................................................................19
Table 6 Cool heat recovery power generation for captive use ..............................20
Table 7 Road class regulation and ISO container specification..............................27
Table 8 Role of each participant ..............................................................................29
Table 9 Reference methodology of CDM project .....................................................30
Table 10 Monitoring methods ..................................................................................31
Table 11 Small scale IPPs of power supply for PLN in Sangatta...........................37
Table 12 Before and After conditions of the power plant for calculation ...............39
Table 13 Economic feasbility study of the Sangatta case .......................................40
Table 14 CO2 Reduction amount from fuel conversion ..........................................41
Table 15 Weight gap between Air Water products and Chart products on the same
LNG loading amount ........................................................................................43
Table 16 Monitoring methods for Sangatta case ....................................................45

vi

1. Introduction
1.1. Background
Energy consumption in Indonesia is expected to increase because of population and
economic growth. The presidential decree of 2006 formulated by the government of
Indonesia has aimed at reducing petroleum dependency and promoting natural gas
use in the context of diversification of energy sources.
However Indonesia doesnt have sufficient pipelines for transport of natural gas.
Location of gas pipelines is limited to Java and Sumatra islands. Also Indonesia has
many islands. Hence infrastructure for transporting natural gas to remote islands is
very limited. Consequently, there are many diesel generators in power plants, factories
and smelters in remote areas. For example, the number of diesel power generators in
remote areas in Indonesia operated by PLN is 4,500 units with total capacity of 2,500
MW.
The government of Indonesia has recently introduced a new policy for supplying LNG
to domestic market instead of exporting. This policy change will result in the supply of
natural gas for domestic market through LNG and increase quota of natural gas from
the production for domestic market. Eventually, the decentralized distribution system
of LNG to remote island areas would be developed. For example, PT Pertagas Niaga
and the association of natural gas distributors of PT Pertagas Niaga is conducting
feasibility study to transport LNG by ISO containers from Bontang to locations of end
users. Considering high dependency of remote island areas on diesel fuel, there is a
very big potential for introducing mini-LNG distribution system for remote areas. It
would lead to conversion of fuel from petroleum products to natural gas and
installation of cogeneration system using natural gas. Such applications of LNG would
result in reduction of fuel cost, energy saving and reduction of CO2 by considerable
amount.
In fact, Japan has been the largest LNG importer in the world. The natural gas from
LNG has been used for promoting energy saving and CO2 reduction by fuel conversion
since 1990s. Besides, Japan has severe terrain to not allow construction of gas
transport pipeline. There are, therefore, many satellite facilities like tanks and small
size vaporizers and equipments like ISO containers of LNG for transportation to

remote areas in Japan. Japan also has the know-how to achieve energy saving in end
users by using LNG.

1.2. Aim and objectives

In this study, Japanese consortium of Nomura Research Institute, Toyota Tsusho
Indonesia and Air water collaborates with PT Pertagas Niaga to introduce Japanese
knowhow and products on satellite transport of LNG as well as knowhow of energy
saving and fuel conversion by using LNG to Indonesia. We assume that potential users
of LNG are power plants operated by PLN and IPP, industrial parks, smelters and coal
mining companies located in remote areas.
This study also aims at identifying the project sites where we could conduct detailed
feasibility studies to clarify the technical issues and commission the facilities in 2016.
Besides, the study would promote technical information of mini LNG facilities and
equipments in Japan to Indonesian stakeholders. Finally, we aim to propose necessary
policy reforms to the government of Indonesia if required.

2. Methodology
2.1. Scope of the project
The entire value chain from the gas well to end users is shown as Figure 1. There are
several steps, but considering the stakeholders positioning, Japanese consortium
would focus on supporting distributors and providing facilities, equipments and related
services including onsite storage tanks and accessories and ISO containers. Japanese
consortium could also provide energy saving facilities and equipments like
co-generation plant, but that would be in the first step of the study. The position that
Japanese consortium would take would depend on the demand by Pertagas Niaga,
local distributors and potential end users. Therefore, the consortium, would not decide
its position in the value chain and look for every business opportunity in the beginning.

Exploration,
exploitation
(Natural gas)

Gas well

On site
liquefaction
(Natural
gas->LNG)
On site
liquefaction
facilities

On site
vaporization
(LNG>Natural
gas)

Onsite
storage
tank
(LNG)

Transport
(LNG)

Power generation

Direct use
of LNG
(LNG)

Fuel for
transportation

Power generation

Main scope

Figure 1 Project scope in the value chain

2.2. Scope of study

Given the above mentioned project scope, the scope of the study is also very flexible
based on demand of the Indonesian stakeholders. Initially, the scope of study, however,
has been set as below.
We have three research topics for this study. The first is a feasibility study on
mini-LNG transport and fuel conversion business in Indonesia. The second is proposal
of policy reform to promote mini-LNG transport and fuel conversion by using LNG in
Indonesia. Finally, we would promote know-how and technical knowledge of mini-LNG
transport facility and equipment in Indonesia.
Table 1 Scope and contents of study
Scope of study

Contents

1. Feasibility study on

Needs survey for the local end users and estimation of

mini-LNG transport and fuel

potential market size as well as confirmation of promised

conversion business in

areas and identification of potential clients.

Indonesia

Confirmation of current regulations, technical standards and

licenses for mini-LNG facilities and equipments.

Business model development including identification of

service menu.

2. Proposal of policy reform

Necessary investment amount and financing methods

Economic feasibility study

To check the current regulations, technical standards and

to promote mini-LNG
transport and fuel

guidelines to facilitate introduction of Japanese technologies.

conversion by using LNG in

To propose necessary regulations to ensure safety if the

government of Indonesia has not introduced yet.

Indonesia
3. Promotion of know-how

and technical knowledge of

mini-LNG transport facility
and equipment in Indonesia

To collaboration with PLN, Industry Associations and other

stakeholders to promote implementation.

To develop MRV methods and estimate possible GHG

reduction amount by applied technologies as well as to
conduct economic feasibility studies.

2.3. Applicable technology

For transporting LNG in the domestic market, ISO containers, satellite facilities
including storage tank, evaporator, and mini-LNG tanker are assumed as technologies.
In this study, those technologies are assumed as applicable technologies.
2.3.1. ISO Containers

Two types of ISO containers, semi-frame 40ft container for trunk line and full-frame 30
ft containers for sub trunk line of transport are considered.ISO containers can not be
applied for local class III roads because of its limitation of width.
Specification of 40ft ISO Container (Semi-frame)

Specification of 30ft ISO Container (Full-frame)

Source: Air Water

Figure 2 Specification of ISO containers

2.3.2. Satellite facilities

Satellite facilities prepare storage tank, vaporizer, piping system to reserve LNG for
buffering the demand and supply gap.
As contrary to the conventional LNG tank for receivable purpose, the satellite LNG
storage tanks dont require very large land for development. Only 17000 mm x 24000
mm areas are required. This satellite facility can be easily developed in port, coal
mining area, power plant, big commercial buildings etc.

Source: Air Water

Figure 3 Example of site design of mini satellite facilities

2.3.3. Mini LNG Tanker

Indonesia has many islands. Sea transport is, therefore, very important. In Japan,
mini-LNG tanker for 1,000-10,000 has been already manufactured by Kawasaki
Heavy Industry and has been operated by domestic shipping companies.

Source: Kawasaki Heavy Industry

Figure 4 Mini LNG tanker

2.4. Study methods

2.4.1. Interviews

We have conducted several interviews with the following stakeholders besides

interview with JCM secretary office of Indonesia.
Table 2 List of interviewees and interview items
Interviewed organizations
Governments

Migas

Interview items

Technical

department

Regulations and technical standards of

plant, facilities and equipments of LNG

Licensing process of products and plant

technical registration

BPH Migas

Regulations and technical standards of

downs stream business of natural gas

Bappenas

Development plan of mini-LNG satellite

facilities

Ministry of

Maritime

Transport

division

Possibility to introduce mini-LNG

satellite facilities and equipments in the
ports

Regulations and technical standards of

mini LNG facilities in the port

Railway

division

Regulations and technical standards of

mini-LNG transport ISO container for
freight railway services

Land

Regulations and technical standard of

transport

mini-LNG transport lorries for land

division

transport

Coordinating ministry of

Reporting the progress of study

Discussion on the progress of technical

economic affairs (JCM

secretary)
Energy

Pertamina

companies

feasibility study by Pertamina

Sharing the technical knowledge and

knowhow of the operation of mini-LNG
facilities and equipments

Pertagas Niaga

Discussion on the progress of technical

feasibility study by Pertamina

Interviewed organizations

Interview items

Sharing the technical knowledge and

knowhow of the operation of mini-LNG
facilities and equipments

Distributers

Member companies of

Discussing business opportunities

natural gas association of

Discussing actual needs for mini-LNG

Pertagas Niaga

facilities and equipments in Indonesia

Sharing the technical knowledge and

knowhow of the operation of mini-LNG
facilities and equipments

Potential end

The government of Kutai

users

Timur

Confirming the demand of fuel conversion

of their own captive power plant

United Tractors

Checking site conditions

Confirming the demand of fuel conversion

of their own heavy duty trucks

Checking location and site conditions

2.4.2. Workshops

In order to promote Japanese know how of operating mini-LNG satellite transport and
technical knowledge and specs of mini-LNG facilities and equipments manufactured
by Air Water or Kawasaki Heavy Industry, we had held a workshop on 18th February
2015 at Jasmine 5 at Intercontinental Hotel Mid Plaza in Jakarta.

3. Results
3.1. Japanese experience
3.1.1. Import and transport of LNG in Japan

Import of LNG has increased constantly since 1988 in Japan. In 2013, the import was
three times of that in 1988, reaching to about 90 million ton. In particular, additional
20 million ton of LNG between 2011 and 2013 was imported because of suspension of
atomic power plants due to damage by severe earthquakes and Tsunami in 2011.

Source: Trade statistics

Figure 5 History of LNG Import amount in Japan

10

In order to import huge amount of LNG, many receivable tanks have been developed in
Japan. Figure 6 indicates the location of receivable tanks, including both primary and
secondary receivable tanks. They are scattered all over Japan, but most of them are
located on the Pacific belt area which is the most industrialized area in Japan. Those
tanks are developed not only by gas companies, but also by electricity power companies,
petroleum companies and steel manufactures.

Pacific ocean belt

(Industrial zone in Japan)

Source: Nomura Research Institute made

Figure 6 Location map of LNG receivable tanks in Japan

11

It is normal to transport natural gas from these receivable tanks to pipelines in most
parts of the world. But Japan did not have adequate transport pipelines of natural gas
from receivable tanks to end users. Only Kanto, Kansai and Chubu regions had
enough pipeline connection between end users and receivable tanks. Consequently,
Japan had to develop the satellite transport network of LNG from receivable tanks to
end users.
Current situation of the distribution of satellite facilities and gas
transport network

Gas transport network

Satellite facilities

source: Ministry of Economy Trade and Industry

Figure 7 Current situation of the distribution of satellite facilities and gas transport
network

12

Figure 8 shows the typical system of mini-LNG transport. Tank lorry and container
freight train can be used for LNG land transport between receivable tanks and
satellite facilities. From satellite facilities, the LNG is vaporized to natural gas by air
temperature or warm water temperature, and then vaporized natural gas is
transported to factories and building of end users by pipeline.
In Japan, ISO containers are also used for multimodal transport by railway service
and land transport service. ISO containers were previously used for sea transport
between Kanto and Hokkaido.
Once certain amount of demand of natural gas is created by using these satellite
transport equipments, transport pipeline would be developed for this route.

Tank lorry transport

Tank lorry transport

Satellite
facilities

LNG
Receivable tank

LNG tank container railway transport

Trailer transport Container freight train transport Trailer transport

LNG
Receivable tank

Freight
Station

Freight
Station

Figure 8 Image of Satellite transport system

13

Satellite
facilities

In case of Kanto region, Tokyo Gas transports LNG by lorries to satellite facilities for a
maximum of 200km distance from Negishi or Sodegaura. Interestingly, this area has
distribution pipeline network, but some of distribution pipeline cannot transport
enough amount of natural gas to the end users and in some cases, there is no trunk
transport pipeline developed near the end users. Hence the LNG satellite transport
system is required along with pipeline distribution network.

Hitachi

Sodegaura

Negishi

Sourcehttp://eee.tokyo-gas.co.jp/industry/indus/lng.html

Figure 9 Distance of land satellite transport system in Kanto region in Japan

14

In another case, railway can transport LNG for more than 300km from Himeji to
Toyama or Niigata to Kanazawa. Railway can transport more than lorry transport. For
example the transport pipeline between Niigata and Toyama was constructed because
there was enough supply track record demonstrated by railway transport of LNG to
justify development of a pipeline to transport natural gas. Hence, the life span of
railway transport is not necessarily longer than lorry transport.

Niigata

Toyama
Kanazawa

Freight railway transport

Himeji

Figure 10 Distance of railway transport between satellite facilities and receivable terminal

15

Mini LNG tanker can also be used for 2,500 m3 size of LNG transport apart from
lorries and railway. Japan has inland sea transport for LNG transport from receivable
LNG tank to satellite facilities. For example, Japan uses 2,500m3 3,500m3 size of
mini LNG tanker for LNG transport.
The typical case is observed between Sapporo and Hakodate as well as Kitakyushu
and Takamatsu. The Kitakyushu LNG terminal is the primary receivable LNG tank
from abroad. Shinju Maru is operated from Kitakyusyu to Takamatsu in Shikoku for
380km for 17 hours journey. Shikoku gas has developed the secondary receivable LNG
tank at Takamatsu. After unloading LNG from the mini-LNG tanker and charging
secondary receivable LNG tank, lorries come to take LNG for satellite transport to
Imabari in Ahime Prefecture for 145km, Kouchi in Kouchi prefecture for 130km and
Tokushima in Tokushima prefecture for 70km. There is very good road connection
between Takamatsu and those destinations. This is a typical multi-modal transport of
mini-LNG between sea transport and land transport in Japan.

Himeji, Osaka Gas

Kitakyushu, Kitakyusyu LNG

Takamatsu
Tokushima

70km

145km

Imabari
130km

380km

Kouchi

Figure 11 Example of multi modal transport of LNG using mini-LNG tanker and lorries

16

3.1.2. LNG and cool heat of LNG use in Japan

Natural gas vaporized from LNG is normally used for city gas, but Japan also utilizes
several other features of LNG like cool heat of LNG. Figure 12 shows general process of
LNG vaporization to natural gas and use of natural gas. In LNG receivable tank, cool
heat of LNG is sometimes used for refrigerators and manufacturing liquid air line
nitrogen, oxygen and argon gas. In the vaporization process, heat gap between LNG
and natural gas can be utilized for binary power generation called as cool heat recovery
power plant. In the end, vaporized natural gas is used for cogeneration including power
and heat generation.
In Indonesia, business developers of mini-LNG transports can also develop these types
of by-product businesses. If the receivable tanks and satellite facilities are located in
remote areas where fishery and agriculture are prevalent, they must develop these
kinds of businesses.
Receivable tanks

Evaporator

Factories etc.

~
~
~

Liquid gas

Refrigerated
warehouse;
Production of
liquid airs

Natural gas

Cool heat
recovery power
generation

Figure 12 General examples of LNG and cool heat of LNG use

17

Power generation, city

gas use, and
Cogeneration system for
energy saving

3.1.2.1. Refrigerated warehouse using cool air from LNG terminals

Table 3 shows the example of cool heat use from LNG receivable tanks to refrigerated
warehouse in Japan. Those refrigerated warehouses stock raw sea foods for Sushi. The
older case was commissioned in 1974, and the system was more than 40 years old.
Table 3 Refrigerated warehouse using cool air from LNG terminals
Companies

Receivable

Commissioning

Capacity (t)

Temperature

Goods

Terminal
Nihon Cho

Negishi

1974

33260

Teion

-40~ - 55

Royal jelly, squid, octopus

-60

Tuna, amberjack

-50-60

Sweet shrimp, urchin,

salmon roe, ice cream

Saibu gas

Fukukita

1982

-30

27600

Shrimps, Crab, Frozen food

engineering

3.1.2.2. Production of Liq. N2, O2 and Ar. from Air

Production of liquid air gas is also a typical bi-product industry in Japan. These gases
are recognized as industrial gas and their typical use is for wielding and for
manufacturing fluorescent lamps. Boiling points of those gases are slightly lower than
the temperature of LNG, but the cool heat from LNG enables to save energy for
separating those gases from air. The oldest plant was developed in 1971 and is more
than 40 years old and it has long track record of operation.
Table 4 Production of Liq. N2, O2 and Ar. from Air
Companies

Receivable

Commissioning

terminal

Capacity (1000 Nm3/h)

LNG through

Liq. N2

Liq. O2

Liq. Ar

put (t/h)

Tokyo Ekika Chisso

Negishi

1971

13.5

6.5

0.25

54

Tokyo Sanso Chisso

Sodegaura

1978

25

0.38

48

Chubu Ekisan

Chita

1980

10

0.1

52

Cold Air Products

Senboku II

1983

7.5

7.5

0.2

40

Japan Air Gases

Niigata

1984

3.5

3.5

0.07

Kyusyu Reinetsu

Kitakyusyu

1984

3.5

3.5

0.08

15

Clear Air

Senboku I

1993

15

6.5

0.4

50

Hydro Edge

Senboku I

2006

12

0.15

18

3.1.2.3. Production of Liq. CO2 gas and Dry ice from emission gas from oil
refineries in Japan
Production of CO2 and dry ice also use cool heat from LNG receivable tanks, but it
needs one more source of rich carbon dioxide air. This is why these plants have to be
located next to a refinery. The oldest plant for manufacturing CO2 liquid air and dry
ice was developed in 1980 and is 35 years old. This type of plant also has a good track
record.
Table 5 Production of Liq. CO2 gas and Dry ice from emission gas from oil refineries in
Japan
Companies

Receivable

Commissioning

terminal

Capacity (t/day)
Liq. CO2 gas

LNG through put

Dry Ice

(t/h)

Kinki Ekitan

Senboku I

1980

120

3.6

Chita Ekisan

Chita

1982

162

72

Tokyo Tansan

Negishi

1983

86

72

5.2

Osaka Tansan

Senboku I

2004

Shin-nihon Sekiyu Seisei

Mizushima

2006

48
370

19

3.1.2.4. Cool heat recovery power generation for captive use

Binary power generation system is also a typical plant in Japan. The oldest plant was
commissioned in 1979 and now we have 16 plants under operation in Japan. Three
types of technologies were introduced like rankine cycle, direct expansion system and
mixed fuel rankine cycle system. These power plants were mainly developed for
captive use to cover the electricity demand in LNG receivable tanks. Accordingly, this
technology is not for the bi-business of mini-LNG transport, but would be used for
saving energy of mini-LNG transport business.
Table 6 Cool heat recovery power generation for captive use
Commissioning

LNG Receivable

Output

terminal

(MW)

1979

Senboku II

1.5

1981

Chita-Kyodo

1982

Senboku II

Technology

LNG through put

Pressure of gas

(t/h)

(MPaG)

Rankine cycle

60

Rankine cycle

40

1.4

Rankine cycle/Direct

150

1.7

150

0.9

150

0.9

150

0.9

expansion
1982

Tobata

9.4

Rankine cycle/Direct
expansion

1983

Chita

7.2

Rankine cycle/Direct
expansion

1984

Chita

7.2

Rankine cycle/Direct
expansion

1984

Niigata

5.6

Direct expansion

175

0.9

1985

Negishi

Mixed Fuel Rankine

100

2.4

cycle
1986

Higashi-Ogishima

3.3

Direct expansion

100

0.8

1987

Himeji

2.8

Rankine cycle

120

1987

Senboku I

2.4

Direct expansion

83

0.7

1987

Higashi-Ogishima

8.8

Direct expansion

170

0.4

1989

Yokkaichi

Rankine cycle/Direct

150

0.9

expansion
1991

Higashi-Ogishima

8.8

Direct expansion

170

0.4

1996

Iwasakibashi

1.2

Direct expansion

45

0.2

2000

Himeji

1.5

Direct expansion

85

07

20

3.1.2.5. Cogeneration system

Since 1987, Japan has installed a lot of cogeneration systems, and currently more than
14,000 units of cogeneration systems are working. The total capacity of those
cogeneration systems will almost reach 10,000 MW (10GW) in Japan.
(Number of units)

Industry use
Non-industry use

Source: http://www.ace.or.jp/web/works/works_0020.html
Figure 13 Number of net accumulated installed units of cogenerations system

Industry use
Non-industry use

Source: http://www.ace.or.jp/web/works/works_0020.html
Figure 14 Number of net accumulated installed capacities of cogenerations system

21

3.2. Current situation in Indonesia

As mentioned in the previous chapter, the demand for energy in Indonesia is
increasing because of its population as well as economic growth. The government
would like to promote natural gas use to decrease the import of petroleum products
like diesel oil and decrease the subsidy for petroleum products from financial
perspective.
Indonesia has many islands and very less pipeline network. Hence, the government
wants to develop LNG transport infrastructure to resolve these severe conditions.
The natural gas consumption in Indonesia is gradually increasing after 2004, but the
production of natural gas has already peaked out (Figure 15). The energy demand
outlook suggests that the consumption of natural gas in 2035 will increase twice as
much as consumption level in 2010 (Figure 16). Considering the difference between
consumption areas and production areas of natural gas and the limitation of LNG
facilities in Indonesia, the government of Indonesia has to develop efficient transport
tools of natural gas in near future to supply energy.
Simultaneously, the government of Indonesia is cooperating with international society
to cope with global warming. Natural gas use is more eco-friendly than using coals and
diesel oils, in general, considering emission gas. In addition, the government will also
cope with the regulation reform of International Convention for the Prevention of
Pollution from Ships, 1973, as modified by the Protocol of 1978 (MARPOL 73/78) by
International Maritime Organization. Consequently the Ministry of Transport will
have to develop LNG bunkering facilities in international ports of Indonesia.

22

Source: U.S. Energy Information Administration, International Energy Statistics, BP

Statistical Review, 2012.
Figure 15 Indonesia dry natural gas production and consumption 2002-2012

Source: IEA and ERIA (2013) Sourtheast Asia Energy Outlook, World
Figure 16 Primary energy demand in Indonesia by fuel

23

Source: U.S. Energy Information Administration

Figure 17 Map of LNG facilities in Indonesia

Considering the social background, Pertamina and Pertagas Niaga have already
started conducting feasibility study for commercialization of mini-LNG transport all
over Indonesia as shown in Figure 18. They have already developed road map for
preparation of mini-LNG transport and time-frame for development of loading
infrastructure for mini-LNG transport in Bontang as shown in Figure 19.
According to the roadmap, most of feasibility studies were conducted in 2014. In the
intermediate workshop held by Pertagas Niaga in December, Pertaga Niaga and its
association companies have already identified technical issues, but the big challenge
on middle size transport of LNG by sea transport to mining sites in Sangatta and
Berau area still remains. Hence, Japanese consortium has been requested by Pertagas
Niaga to cooperate for conducting joint feasibility study in the next phase.
In terms of the development of loading facilities, Pertagas Niaga only assumes barge
transport with ISO containers. Mini-LNG tanker, however, is necessary to satisfy the
demand of LNG in coal mining area. Pertagas Niaga and Japanese consortium
continue to discuss solutions to manage this gap.

24

Source: Pertagas Niaga

Figure 18 Road map to commercialization

Source: Pertagas Niaga

Figure 19 Milestone LNG Filling Station & LNG Receiving Terminal Infrastructure for
LNG For Mining Project

25

3.3. Regulation(s) and policy(ies) related to the project

3.3.1. Technical regulation on min-LNG transpor faciliteis and equipments

In terms of LNG and natural gas provision for domestic market, some actions have
already been taken by the government of Indonesia. First, the Arun, which is originally
LNG exporting facility, would be converted to LNG import facility to provide natural
gas for north part of Sumatra. Second, Pertamina promotes the mini-LNG concept for
transport of LNG for domestic market in small scale using ISO containers and other
considerable equipments. Pertagas Niaga has been appointed for this concept and is
conducting several trials. Third, Ministry of Transport, Maritime division also shows
its interest, because the ministry has to follow the request of the international treaty,
International Convention for the Prevention of Pollution from Ships, 1973, as modified
by the Protocol of 1978 (MARPOL 73/78). In summary, there is no case to use
mini-LNG equipments and facilities right now, but demand can be considered to be
very high.
Despite this situation, there is no specific regulation and technical standard for
mini-LNG facilities and equipments in Indonesia.
The nodal agency of technical aspects of mini-LNG facilities and equipments is MIGAS
technical department. According to MIGAS technical department all equipments are,
in pricipal, allowed to be used when they follow international regulation or Japanese
regulation. Japanese regulations are sometimes very strict for Indonesian situation, so,
the government of Indonesia relaxes Japanese regulations in some cases and then
applies them for Indonesian market. The specification of each equipments and
faciliteies has to be shared with authorities in Indonesia to be examined. Once such an
examination is conducted, opeartors can use them more conviniently.
3.3.2. Safety regulation

In terms of labour safety regulation and guideline, it will be regulated by the Ministry
of Labour, but the actual operation manual in case of existing LNG export terminal is
developed by Pertamina. The ministry only regulates general matters and the ministry
always relies on specific entity to regulate technically specific matters. So currently,
Japanese consortium has to develop common understandings with Pertamina and

26

Pertagas Niaga on the safety regulation to handle mini-LNG facilities and equipments
in Indonesia.
On the other hand, another regulator of downstream natural gas business, BPH Migas,
has not been appointed for mini-LNG satellite distribution. BPH Migas is only in
charge of pipeline distribution, and in terms of pipeline distribution business, BPH
Migas is concerned with the safety issues. When the higher government, MIGAS,
appoints BPH Migas to control and supervise the mini-LNG satellite transport
business, then BPH Migas will develop regulations. Currently only Pertamina and
Pertagas Niaga are in charge. BPH Migas is, therefore, an outsider to this issue.
3.3.3. Road space limitation

In terms of the regulation of road specification, no ISO container will be allowed to

pass on the class III road because the width of any ISO container will not be
compatible with the width of Class III road.
Class III road is typical road in Indonesia, and it means that it is necessary to develop
dedicated container or lorry to transport LNG in local areas in Indoneisa. This is the
biggest challenge at this moment.
Table 7 Road class regulation and ISO container specification
Road class

Specification of road

ISO Container

Width

Length

Height

Weights on

20ft

30ft

40ft

mm

mm

mm

axist

Class I

2500

18000

4200

10

Class II

2500

12000

4200

Class III

2100

9000

3500

Special Class

2500

18000

4200

10

27

3.4. Role of each participant

In order to complete the entire value chain of mini-LNG transport, we need three kinds
of partners, namely, LNG provider for domestic market, distributors and end users. In
terms of LNG provider, Pertagas Niaga is only provider which can supply LNG for
domestic market in Indonesia. For transport, eight local distributors have been
appointed by Pertagas Niaga. Each local distributor has to find its own end users. PLN,
local governments and coal mining companies are also expected to become end users of
LNG. Through the trials by Pertagas Niaga and its distributors, some of partners of
trials are expected to be end users of LNG. Apart from these three stakeholders, the
equipments and facilities supplier could be considered as a local partner in Indonesia.
At this time, Japanese companies, consortium members, will establish a special
purpose company for this purpose.
The SPC is also expected to provide financial function by leasing/rental scheme and
maintenance and inspection service as well as consulting for users on how to use,
maintain and keep the safety.

LNG provider

Distributers

End users
(Still negotiating)

Under negotiation

Special purpose vehicle

(Indonesian company established by Japanese companies)

Figure 20 Considerable local partners

28

Table 8 Role of each participant

Stakeholders

Role

Pertagas Niaga

(Pertamina)
Distributers

To develop loading facilities of LNG at Bontang and other LNG

receivable tanks

To provide LNG at Bontang and other location to distributors

To develop the end users of LNG as clients

To prepare transportation tools like ISO containers and satellite

facilities

End users
Japanese consortium

To transport LNG in small scale to end users

To introduce LNG use equipments

To consume LNG as fuel

To provide mini-LNG facilities and equipments for distributors or

end users

To provide installment payment service or finance service like

leasing or rental equipments and facilities

To provide regular inspection services on equipments and

facilities

To provide the safety training to the operators

29

3.5. Reference scenario setting

The methodology for GHG emission reduction estimation and monitoring would be
developed by following CDM methodologies as shown in Table 9. The project scope
includes three chains of transport, storage/vaporization and use. In each, several
methodologies can be applied. For example, AMS-III.AY and AMS-III.BC can be
applied for transport, AM0088 can be applied for storage and vaporization, and
AM0014, ACM0009 and ACM0011 can be applied for use of LNG. The symbol of circle
in the table shows that the CDM methodology can apply directly for this project, but
black triangle symbol suggests that we would have to modify CDM methodology to
some extent to apply it for this project.
We cannot, however, decide which methodology would apply to each process in the
beginning because it depends on the type of end user and we are still negotiating at
this point.
Table 9 Reference methodology of CDM project
Category

CDM methodology

Scope
Transport

Storage

Use

Vaporization
Natural gas

AM0014

Natural gas-based package cogeneration

related

AM0088

Air separation using cryogenic energy

recovered from the vaporization of LNG

ACM0009

Consolidated baseline and monitoring

methodology for fuel switching from coal or

petroleum fuel to natural gas
ACM0011

Fuel switching from coal and/or petroleum

fuels to natural gas in existing power plants

for electricity generation
AMS-III.AY.

Introduction of LNG buses to existing and

new bus routes

Fuel consumption
efficiency

AMS-III.BC.

Emission reductions through improved

efficiency of vehicle fleets

improvement

30

3.6. Monitoring methods

For each potential methodology, the following baseline scenario, project scenario and monitoring methods have been developed. In
terms of monitoring method, we have to adjust to the site conditions from initial idea in the following table.
Table 10 Monitoring methods
Category

Natural gas

CDM methodology

AM0014

related

AM0088

ACM0009

JCM Methodology
Baseline

Project

Monitoring methods

Natural gas-based package

Without cogeneration

With cogeneration system

Consumption of natural gas in cogeneration plant

cogeneration

system

and improved energy

Power supply for end users

efficiency

Heat supply for end users

Air separation using

Without binary power

Energy recovery by binary

Power generation by binary power generation

cryogenic energy recovered

generation

power generation

Reduction of fuel consumption by PLN in east Kalimantan

from the vaporization of

Saving transmitted power

considering fuel mix in PLN Kalimantan Timur as much as the

LNG

supply

amount reduced by binary power generation.

Consolidated baseline and

Energy consumption

Energy consumption after

Emission coefficient of CO2 of natural gas and net heat amount

monitoring methodology for

before fuel conversion

fuel conversion

Energy efficiency of production process using natural gas

Fuel switching from coal

Power generation

Power generation after fuel

Fuel consumption, heat amount and emission co-efficient from

and/or petroleum fuels to

before fuel conversion

conversion

project

fuel switching from coal or

petroleum fuel to natural gas
ACM0011

natural gas in existing power

Transmitted power from grid or to captive equipments

plants for electricity

generation

31

Category
Natural gas

CDM methodology

JCM Methodology

AMS-III.AY.

Introduction of LNG buses to

Transport of LNG by

Transport of LNG by CNG

Diesel fuel consumption by a track, by average and by annum

existing and new bus routes

diesel tracks between

tracks between Bontang and

CNG tracks fuel consumption

Bontang and

destinations

Number of track operations

related

destination

Only one diesel fuel track will be still remained to set the base
line

Fuel
consumption
efficiency
improvement

AMS-III.BC.

Emission reductions through

Transport of LNG by

Transport of LNG by the

Diesel consumption by the second lightest container for setting

improved efficiency of vehicle

the second lightest

best lightest container

baseline by average and by annum

fleets

container between

between Bontang and

Diesel consumption by the best lightest container for setting

Bontang and

destination

baseline by average and by annum

destination

Improved tonnage-kilo meter method will be used for

calculation. The gap between the best and the second lightest
containers weight will be converted to loading rate.
http://www.meti.go.jp/committee/downloadfiles/g50910a11j.pdf
Number of track operation

32

3.7. Promotion activities like seminars for Indonesian stakeholders

The first workshop on promoting Japanese experience of mini LNG to Indonesia was
held on 18th of February, 2015 at Intercontinental hotel Midplaza in Jakarta.
We had two sessions during the day. The morning session is for Pertamina and
Pertagas Niaga. Totally 11 officers including the director for Pertagas Niaga joined the
meeting. There were active discussions and Q&A on every page of the presentation.
The afternoon session gathered 13 officers from government bodies and distributors.
There were many questions and comments for the Japanese technologies and
distributors expressed actual needs in Indonesia and suggested to Air Water and
Kawasaki Heavy Industry officers to customize their products to suit Indonesian
situation.
In addition, the Bappenas officer suggested tendering opportunity to Toyota Tusho
officers for procuring satellite facilities along main roads in Indonesia.
The workshops were welcomed by Indonesian side and they strengthened their
understanding of mini-LNG facilities and equipments from technical and operational
perspective.

Figure 21 Seminar presentation

33

4. Analysis
4.1. Business plan
4.1.1. Project location

As of now, only one LNG loading facility is present in Bontang in the east Kalimantan
for domestic market. Bontang is the origin of mini-LNG transport. The potential end
users are located in Samarinda, Sangatta and Berau. Most of the potential users are
coal mining companies and their contractors, local governments, and power companies
like PLN. End user information is confidential from business perspective, so we cannot
disclose it.
In terms of the distance from Bontang, Samarinda and Sangatta are not so far, they
are less than or around 100km, but Berau is very far; it takes about 3 days by land
transport. In addition, road condition between Sangatta and Berau is not good because
the road goes over mountain area. The sea transport would therefore be examined in
the trial stage.
Japanese consortium discussed local distributors and some end users in these areas.
Finally, we focused on Kutai Timur government in Sangatta as the most promised end
user partner at this moment.

Berau
More than 500km
About two days journey

456km

Sangatta

75km

Samarinda

Figure 22 Project location

34

4.1.2. Sangatta case description

4.1.2.1. Current situation of power supply in Sangatta

Sangatta is 310km north from Balikpapan via Samarinda and Bondang. It is more
than a 9 hours drive from Balikpapan and almost 2 hours drive from Bontang. The
area belongs to Kutai Timur (East Kutai) provincial government. The government
office of Kutai Timur is located on the east end of Sangatta city area.
This area is very famous for coal mining. We can easily find open-cut coal mining in the
north direction from the hill top in the city area.
Sangatta
70km
Bontang

120km

Samarinda

120km

Balikpapan
Figure 23 Location of Sangatta

35

Recently, the electricity demand of households and business is growing. The only
demand which PLN knows excluding the demand of captive use in coal mining and
government sector is reaching a little lower than 16MW.
The peak demand of electricity has increased since 2009. In particular, we could find
sharp increase in demand between 2011 and 2012. The peak demand is still growing
every month. For such high peak demand growth, the power generators have been
added up to 15.8MW. In case the peak demand grows at the recent pace, the additional
capacity of power generation would have to be developed to cope with the demand
growth.

Source: PLN
Figure 24 Capacity of power generation and peak demand of electricity in Sangatta (PLN
know only)

36

Now, the government and private companies have a total of 15.2 MVA power
generation plants near Sangatta with in 20 km from Sangatta city area. Apart from
Kutai Timur Government captive power plant and a total of 11 MVA privately owned
public use diesel generators, the rest of power generators have limited capacity of
power generation. They have a maximum of 250KVA capacity only. The reason for
such small capacity is the low demand. Besides, current high fuel cost doesnt allow the
government to expand the capacity of power generators in remote areas in this region.
Hence, the local government of Kutai Timur looks for more economical and efficient
power generation system in this region.

Sepaso Public use diesel generators

250KVA

Makuti Jaya
Public use diesel generators
100KVA2
Kutai Timur Gov. Captive power plant
3.5MVA
Sangatta Public use diesel generators
250KVA

Private own public use diesel generators

Total11MVA

Source: Kutai Timur Govement

Figure 25 Power generators near Sangatt within 20km from Sangatta city area

The breakdown of privately owned public use diesel power generators is shown in
Table 11. The generated power is sold to PLN for public use.
Table 11 Small scale IPPs of power supply for PLN in Sangatta
Operation company

Location

Capacity

Fuel

a.

PT. Sumberdaya Sewatama I

Sangata

3 MW

HSD

b.

PT. Sumberdaya Sewatama II

Sangata

4 MW

HSD

c.

PT. Kaltimex Energy http://www.kaltimex-energy.com/company.php

Sangata

4.5 MW

HSD

Source: PLN

37

In addition, the local government of Kutai Timur has 500 kVA generated by 7 units of
captive power generators for their own use. The power is mainly used for lightening
building. The generators are developed two sets by two sets and the generators do not
always work at the same time. Depending on the demand of electricity by government
building, each power generator is switched on/off by the operators.
The fuel of these power generators is supplied from Samalinda. Storage capacity of
tanks is 20 kl by 2units. 50 to 60 tons of diesel fuel is consumed in a week. In total
3400 kl 4000 kl diesel fuel was consumed per year. It is equal to 40 billion Rp. 50
billion Rp. in 2014. The local government of Kutai Timul has a need to reduce this high
fuel cost and they can consider converting fuel from diesel to LNG if the economic
viability is confirmed.

Figure 26 Captive power generators owned and operated by Kutai Timur government in
Sangatta

38

4.1.2.2. Proposing plan of fuel conversion to LNG

We are proposing the following conditions as a first proposal to the local government.
Based on these conditions, we will negotiate and finalize the specification of converted
power generation sets.
Table 12 Before and After conditions of the power plant for calculation
Remarks
Before (Diesel)

Number

Capacity of diesel

3,500

Unit

Note

kW

500kVA7

power plants
Availability

30

Diesel fuel price

980

Operation cost
Fuel transport cost
After (Gas)

Gas engine power plant

Power generation

60,000

USD/yr

3,800
11,400,000

Thematic calorie of

37.25

natural gas

kW

sets

60,000

USD/yr

120,000

USD/yr

3.5

JPY/kWh

Durable years

10

Year

20

0.9

kg-CO2/kWh

expenses
CO2 emission

Electricity

coefficients

Gas

2.29

kg-CO2/m3

Diesel fuel

2.58

kg-CO2/L

119

JPY/USD

Exchange rate

39

1500kVA2

USD/MMBTU

Maintenance costs
Interests and other

30000USD/yr

MJ/N

ISO container 30ft

Fuel transport cost

2 operators

kWh/yr

set

Operation cost

30000USD/yr

hr/yr

1
20

2 operators

LNG satellite facilities

LNG price

Lease conditions

USD/yr

40

Operational hours

USD/KL

60,000

3,000

Availability

2 operators
30000USD/yr
4 operators
30000USD/yr

4.1.2.3. Scale of investment & financial viability

Normally, one ISO container needs 30-40 million JPY, one satellite facility with 100 m3
storage needs 300-400 million JPY and one mini-LNG tanker with 1000m3 storage
tank needs 3-4 billion JPY. The total project costs would be estimated based on the
design of the project including how many containers are necessary, how many storage
facilities are necessary, and how many vessels are necessary. This time, we assume the
capex to be 5,960,168 USD in the first year. This is cost plus factor of fuel conversion.
The operation cost can be reduced by 1,225,216 USD. Therefore, the project owner can
pay back in almost 5 years without considering interest payment.
The point is that ISO containers and most of the equipments in satellite facility are
movable and we can use them even after some of clients stop using them. It means that
we propose leasing scheme with 20% interests per annum for 10 years. In this case, the
project owner can save 509,996 USD (60,689,498 JPY) annually.
Table 13 Economic feasbility study of the Sangatta case
Energy consumption
Items

Unit

Grid electricity

kWh/yr

Diesel fuel

kL/yr

LNG(NG)

Nm3/yr

Current

After fuel conversion

0

Note
0

3,800

2,754,362

Fuel costs
Items

Unit

Current

Diesel fuel

USD/yr

LNG

USD/yr

Cost reduction

USD/yr

Fuel costs reduction rate

After fuel conversion

3,724,000

Note

2,203,490
1, 520, 510
59%

Capital investment for fuel conversion

Items

Units

Power generator set

Capital investment [USD]

1,261 USD/kW

3,781,513

Compressor

84,034 USD/Unit

168,067

LNG satellite

714,286 USD/Unit

714,286

LNG satellite BOP and construction

300,000 USD/Unit

300,000

ISO container (30ft)

126,050 USD/Unit

756,303

trailer head

40,000 USD/Head

240,000

Total

5,960,168

Running costs
Items

Unit

Current

After fuel conversion

Fuel costs

USD/yr

3,724,000

2,203,490

Maintenance costs

USD/yr

100,000

335,294

Wages

USD/yr

120,000

180,000

Leasing costs

USD/yr

715,220.17

3,944,000

3,434,004

Total
Gap

USD/yr

509,996

40

Note

4.1.2.4. Quantification of GHG emissions and their reductions

In Sangatta case, we assume two types of CO2 reduction opportunities.
The first opportunity is use stage and we introduce gas engine power generators
instead of diesel power generators. For this, ACM0011 of CDM methodology can be
applied for quantification of GHG emission reduction.
ACM0011 assumes fuel switching from coal and/or petroleum fuels to natural gas in
existing power plants for electricity generation and comparing between power
generations before fuel conversion and power generation after fuel conversion, namely
diesel generators and gas engine in this case.
As assumed in Table 12, we have calculated the amount of CO2 reduction following
ACM0011. The result is shown in Table 14. We have got 3,497 t-CO2/year from this
fuel switch and reduction rate reaches 36%.
Table 14 CO2 Reduction amount from fuel conversion
Items

Unit

CO2 emission amount

t-CO2/yr

CO2 reduction amount

t-CO2/yr

CO2 reduction rate

Current

After fuel conversion

9,804

6,307
3,497

36%

The second opportunity is in transport stage. Given the situation of installing LNG
satellite system, we still need to transport fuel from Bontang. Of course we can shorten
the distance of fuel transport between Samalinda and Bontang, but shortening of
transport distance is not a substantial improvement to JCM scheme. It is because
conventional technology is still used for transport from Bontang. In this context,
conventional technology of transport is the technology which has already been
installed for the trail activities by Pertagas Niaga. The equipment is ISO container
manufactured by Chart, which is a famous company in the world in this field shown in
Figure 27.
The technology employed by Chart is Super insulation type and Air Water employs
Composite type (Figure 28). Composite type of ISO container has the best feature for
land transport from maintenance perspective (Figure 29). In addition, Air water
product is lighter than Chart products in per loading LNG amount. In case of 30ft
41

container, the Air Water product is lighter than the Chart product by 2.6 ton (Table 15).
Based on this weight gap, the following GHG reduction has been calculated.

Source: Pertagas Niaga

Figure 27 ISO container manufactured by Chart

Source: Air Water

Figure 28 Type of technology of ISO container for mini-LNG transport

42

Source: Air Water

Figure 29 Technical comparison among three type of ISO containers
Table 15 Weight gap between Air Water products and Chart products on the same LNG
loading amount
ton
Air water

Chart

20ft

30ft

Loading weight

40ft
10.9

Dead weight

9.1

Total weight

20.0

Loading weight

8.4

13.2

10.9

18.0

Dead weight

7.5

11.7

11.7

16.0

Total weight

15.9

24.9

22.6

34.0

Weight gap

2.6

Source: Air Water

As mentioned above, the key point of CO2 reduction is the weight gap from
conventional technology. This is a kind of emission reductions is through improved
efficiency of vehicle fleets (AMS-III.BC). The idea of calculation of CO2 emission is to
estimate the difference in fuel consumption from transport of LNG between
conventional container and the lightest container (Air Water product) between
Bontang and the destination.
43

According to the calculation, the transport using Japanese technology enables to

reduce CO2 emission by 7318.5 ton-CO2/year and totally reduces 10,815 ton-CO2/year
from both the stages (Figure 30). This reduction amount is almost equal to CO2
emission from 2000 households in a year in Japan. Accordingly, the CO2 reduction
amount from Sangatta case has a very significant contribution to the mitigation of
global warming.
LNG consumption
ISO Container capacity
ISO Container use

2,754,362 Nm3/yr
23.7 N/turn
116,218 turns/yr

ISO Container weight gap

2.6 ton/ turn
Distance between Bontang and Sangatta (return)
140.0
Emission coefficient of normal truck
173.0 g-CO2/ton-km
CO2 reduction amount per turn
62,972.0 g-CO2/turn

Annual CO2 reduction (Transport)

7,318.5 ton-CO2/yr

Annual CO2 reduction (Total)

Annual CO2 reduction (use)

3,497 ton-CO2/yr

10,815 ton-CO2/yr

Note: Emission coefficient of normal truck refer green partnership guideline developed
by METI and MLIT in Japan, http://www.greenpartnership.jp/pdf/co2/co2brochure.pdf
Figure 30 CO2 emission reduction amount calculation

44

4.1.2.5. MRV methods

In terms of the monitoring of CO2 emission, the following monitoring methods are
assumed. In terms of use stage, previous average diesel fuel consumption and
natural gas consumption should be compared. With regard to the transport stage, the
frequency should be monitored.
Table 16 Monitoring methods for Sangatta case
Phase

Monitoring methods

Use

Fuel consumption, heat amount and emission co-efficient from project

Transmitted power from grid or to captive equipments

Diesel consumption by the best lightest container for setting baseline by

Transport

average and by annum

Improved tonnage-kilo meter method will be used for calculation. The gap
between the best and the second lightest containers weight will convert to
loading rate.
(http://www.meti.go.jp/committee/downloadfiles/g50910a11j.pdf)

Number of track operation

4.1.2.6. Service supply scheme

As mentioned before, the role of local partners is very clear (Table 8) and in the
Sangatta case, the roles are expected to be played. The detail service and financial
stream among stakeholders are shown in Figure 31.
According to the Indonesian regulation, logistics service should be provided by local
majority company. In this case, a distributor would be appointed, but we have not
decided which distributor would be appointed for this opportunity yet.

LNG
Leasing f ee
Rental f ee

Ownership of
f acilities and
equipments

SPC
Products
Service line
&
Tech. Service Rental or leasing and
maintenance of the
equipments
Finance
Consulting of LNG
&
equipment operation
Operation

Rental
&
Maintenanc
e service

LNG
Local distributer

Figure 31 Service supply scheme

45

Leasing f ee
+
LNG charge

LNG

Kutai
Timur
government

4.2. Proposed over all implementation schedule

We are assuming three steps for promoting implementation of mini-LNG transport
facilities and equipments. Pertagas Niaga has already conducted Ph1 trial, so we will
join them in Phase 2. Now, we assume to size up field test by land transport in Phase
2-1. In the Phase 2-2, we would like to check sea transport using barge system and ISO
container supported by top lifter. Then, finally, we would like to introduce mini-LNG
tanker for much larger scale transport of LNG. In parallel to the trial implementation,
the actual business implementation is also expected, but this is up to business
discussion with potential clients and local distributors.

Phase2-1
(Scale up)
Filling f acilities

Land transport

Storage

Phase2-2
(Sea Trans.
Barge)
Gantry Crane

Top lif ter

Barge system

Land transport

Storage

Land transport

Storage

Phase2-3
(Sea Trans.
Tanker)
Loading f acilities

Sea transport

Loading f acilities

Storage

Figure 32 Steps of implementation of trial stage

The time line has been developed by Pertagas Niaga. Pertagas Niaga is now
developing loading facilities in Bontang. According to the development of the loading
facilities, Phase 2 trials can be implemented step by step.
In between January 2015 and January 2016, loading capacity is limited to 0.8-2
MMSCF/d, but in 2016, the loading capacity will increase to 30 MMSCF/d and in
January 2017, the capacity will reach to mini-LNG tanker size. By then, all
preparations are expected to be implemented.

46

Jan.2015

Jan.2016

Jan.2017

0.8 2 MMSCFD
Loading capacity

30 MMSCFD
Loading capacity

small LNG Carrier

Loading capacity

Jan.2018

Construction satellite
facilities and procurement
ISO containers

Phase2-1
(Scale up)

Phase2-2
(Sea Trans.
Barge)

Phase2-3
(Sea Trans.
Tanker)

Field test

Design
of
whole
picture
of 2nd
phase
f ield
test and
procure
ment

Finding
potential
users

Construction satellite
facilities and procurement
ISO containers
Field test

Finding potential users

Construction satellite facilities and
procurement ISO container as well as
development of small LNG tanker
Field test

Figure 33 Ideal schedule of implementation

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4.3. Policy implication

4.3.1. Contribution to Indonesian Sustainable Development

The most important contribution of this project idea for sustainable development of
Indonesia is to not only introduce the mini-LNG transport facilities and equipments
and reduce GHG emission, but also enable developing huge opportunities in future to
convert primary energy source to natural gas and reduce GHG as well as other
pollutants. We cannot estimate positive impact from this idea precisely, but it is
believed that enormous positive outcomes can be achieved from this trial.

4.3.2. Capacity building to the host country

Capacity building on safety issues to handle LNG in Indonesia is also a very important
matter. According to Pertamina, it will control everything under its supervision during
the trial phase. So, no private entity is doing business in this field by itself.
Pertagas Niaga has already asked us to share our knowledge and experience in Japan,
and we held a workshop to transfer our knowledge on mini-LNG in Japan to
Indonesian stakeholders on 18th February, 2015.
During project implementation, the SPC will provide technical knowledge for
Indonesian stakeholders on how to handle the ISO containers and mini-LNG facilities.
Also, the SPC will provide the maintenance service of ISO containers because the
condition of vacuum of ISO containers is expected to be checked every ten years. This
technical service will be supported using Japanese technology. This maintenance work
would also prevent leakage of boiled gas from the container. Hence, this maintenance
will not increase GHG from the activity.

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5. Conclusion and Next Steps

5.1. Conclusion
This study has reviewed the regulatory framework, development policy and progress of
technical feasibility study by Pertagas Niaga and its associated distributors. Also the
technical information of Japanese technology has been distributed to stakeholders in
the workshop.
During the study, we were able to identify the potential end users of LNG and conduct
rough economic feasibility study and roughly estimate CO2 reduction as the
environmental impact.
Finally, we could determine that the Sangatta case will enable significant amount of
CO2 reduction from LNG use as well as LNG transport. Therefore, it can be considered
that this case can be applied for JCM project scheme.

5.2. Next steps

Regarding Sangatta case, we are in the first proposal phase to the Kutai Timur
Government. We need a little time to involve the local government. Accordingly, the
next obvious necessary activity is to confirm the detail conditions with the local
government.
In addition, we are also approaching Pertagas Niaga and local distributors to conduct
the second step of technical feasibility study for large amount of transport from
Bontang to Sangatta by mini-LNG tanker or barge system with ISO containers. For
this trial, we also have to discuss detail design of feasibility study with Pertagas Niaga.
After finalizing all conditions for the next step, we would like to realize all
opportunities in Kalimantan Timur region. To promote this idea, we would like to
apply for the NEDO scheme. This is still under negotiation with NEDO.
As soon as we finalize all conditions, we would apply for NEDO.

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