Eksplorasi Hidrokarbon

Natural Gas Hydrate
Economics
Widodo W. Purwanto
Departemen Teknik Kimia

Universitas Indonesia
Natural Gas Economics 2012
Content
Gas hydrate reserves

Gas hydrate production technology
Ocean gas transportation (GTS)
Economic aspects
What is Natural Gas Hydrates?

Gas hydrates are crystalline
substances composed of water and gas
in which a solid water-lattice
accommodates gas molecules in a
cagelike structure (clathrate)
Type of gas hydrates

1. Unconventional gas reserves
2. Synthetic gas hydrate
Hydrate Structures
Type I
Type II
Type H
Concentrates gas with a ratio of ~ 1:160
Source: U.S. Geological Survey
Sources: U.S. Geological Survey and Texas A&M University
One cubic foot of gas hydrate

contains
160 cubic feet of gas at standard
temperature and pressure
Gas Hydrates Potential
where?
860 tcf?
The gas hydrate resouce

pyramid
Global estimates place the gas volume

(primarily methane) resident in oceanic natural
gas hydrate deposits in the range of 30,000 to
49,100,000 trillion cubic feet (Tcf), and in
continental natural gas hydrate deposits in the
range of 5,000 to 12,000,000 Tcf.
Comparatively, current worldwide natural gas
resources are about 13,000 Tcf and natural
gas reserves are about 5,000 Tcf.
Gas hydrate stability
Migration of gas along faults and

hydrate formation
Technology of NGH Recovery from

Seafloor Reserves
(a) presence of gases (e.g.,
methane, ethane,
propane) shifts the
boundary curve to the
right
(b) presence of chemical
inhibitors (e.g., methanol)
shifts the boundary curve
to the left.
Ruppel, 2011
P-T equilibrium curve for watermethane system
Makogon, 2010
Gas Hydrates Production Technology

thermal injection
(b) depressurization
(c) inhibitor injection.
(a)
Ruppel, 2011

Seafloor Reserves
(a) Thermal injection:
The use of a heat source of energy to

raise the reservoir T, thus breaking the
hydrogen bonds in the hydrate to release
the gas
Hot water, steam and brine are commonly
used

Seafloor Reserves
(b) Depressurization:
When the reservoirs P is reduced,

hydrate dissociates by absorbing energy
from the surrounding reservoirs T
decreases.
Hydrate will continue to dissociate until

sufficient gas evolves to achieve the
equilibrium P. at the lower T.

Seafloor Reserves
(c) Inhibitor injection
By injecting chemicals to the sub-sea

hydrates, dissociation will occur.
The chemicals decrease the stability of the

hydrate by changing the equilibrium T or P.
Alcohols (methanol) and glycols are

commonly used.

Seafloor Reserves
Disadvantages
Thermal stimulation
requires much materials
poses environmental effects
Depressurisation
forms ice and/or reforms gas hydrate due to the
endothermic gas hydrate dissociation
Inhibitor injection
poses environmental effects.
causes corrosion on pipelines if air dissolves in the
inhibitor
Effect of depressurization, temperature

stimulation and inhibitors on the hydrate
stability curve
CO2 injection
The figure illustrates the

molecular mining method by
means of CO2 injection in order
to extract CH4 from gas hydrate
reservoirs. The concept is
composed of three steps as
follows; 1) injection of hot sea
water into the hydrate layer to
dissociate the hydrates, 2)
produce gas from the hydrate, 3)
inject CO2 to form carbon dioxide
hydrate with residual water to
hold the sea bed stable
Why the interest in Gas Hydrates?

Safety:
Hydrates plug flowlines

Hydrates can be geohazards
Resource:
Methane Hydrates are a source of natural gas
Environmental:
Sensitive Communities use hydrates as food

Methane Hydrates can contribute to global warming
Potential Impact of Natural Gas Hydrates

in the Seafloor Sediments On Deepwater
Production Facilities
Hydrates Form On
Exterior of Subsea
Equipment
Heat From Buried

Pipelines Cause
Hydrate Dissociation
Hydrates Dissociation
Affects Foundation of
Surface Facilities?
Heat From Production
Wells Causes Hydrate
Dissociation
99-00075
Ocean NGH transportation concept
NGH and LNG Comparison

Natural Gas
Hydrate (NGH)
Liquefied Natural Gas

(LNG)
Solid
Liquid
Temperature to be
maintained
-200C
-1620C
Gravity
0.85 - 0.95
0.42 - 0.47
Contents in 1 m3
Natural Gas:
170Nm3
Water: 0.8 m3
Natural Gas: 600 Nm3
Modes of
Transport and
Storage
Physical Property Data for NGH and LNG
Properties of Gas Storage Media
much gas can be stored at milder conditions
Dissociation of the hydrates
Hydrate dissociates quickly under standard temperature and

pressure. The dissociation of the hydrates containing methane
molecules occurs satisfying the following reaction equation
(Sloan et al, 2003):
CH4.6H2O (solid) CH4 (gas) + 6 H2O (liquid)
The value of H dissociation is 10 20 kcal/mol of gas

dissociated. Thus, the dissociation requires an external energy
source to propagate along the right hand side. It is necessary
therefore to cool down its temperature to -80oC to stop its
dissociation completely.
It is confirmed, however, that under a certain condition the
hydrate does but very slowly dissociate even if it is kept under
the a standard condition (non-equilibrium area) which would,
otherwise, bring about a complete dissociation. This
phenomenon is called "self-preservation effect" -20oC
Effect of methane hydrate temperature of the rate of

weight reduction as the hydrates are exposed at
standard conditions (25oC, 1 atm)
Methane hydrate pellets under

condition of self-preservation
NGH pellet production
NGH carriers
Flow sheet NGH production
Javanmardi et al, 2005
Javanmardi et al, 2005
Cost Estimation
Capex Distance
CNG Marine Economics
Widodo W. Purwanto

Outline
Overview of CNG Marine
Technology
Simple Economic Analysis of
CNG Marine
CNG ships add value for producers
Overview of CNG Marine
CNG Process
CNG marine transport chain
CNG Specification
Component
Limit
Methane
min. 88%
Ethane
max. 6%
C3+
max. 3%
Oxygen
max. 1%
CO2+N2
range 1.5-4.5% (CO2 maks 3%)
Sulphur
max. 16 ppm (H2S mak 4 ppm)
Water
max. 65-112 mg/m3 (4-7 lb/MMscf)
Wobbe Index
46-52 MJ/m
Gas Capacity
CNG Logistic parameters
Logistic Equations
-Tug speed
: 12 knot
- GTM Volume : 134 MMscf
- Load Factor : 100 %
tloading (h)
Vb arge ( MMscf )
Rate _ gasl ( MMscfd )
x 24h
Dis tan ce(km)

ttravel (h)
Tugspeed(km / h)
Number _ B arg e
t roundtrip (h)
tloading (h)
tloading (h) tunloading(h)

troundtrip (h) tloading 2 * ttravel tunloading
Number _ Tug
2 * ttravel (h)
Number _ B arg e
t roundtrip (h)
Hub-and-Spoke & Milk-Run
CNG Marine Technology

Provider
COSELLE
(USA)
TransCANADA (Canada )
VOTRANS
(USA)
TransOCEAN (Canada)
KNUTSEN
(Norwegia)
Coselle (USA)
Coselle (USA)
Coselle Stack design

stacking & support
Cosselle arrangement in barge
Cosselle arrangement in barge
Coselle CNG Tug & Barge

system
Votrans-Enersea (USA)
Votrans pressure vessel

specification
Votrans pressure vessel
Pressurized tube configurations

in Votrans CNG ship
Pressurized tube configurations

in Votrans CNG ship
TransCanada
Specification
Storage Capacity
Barge mounted 25+ mmscf ship up to 1 bcf
Storage System
Pressure vessel consists of a high strength steel

inner liner and heads and wrapped with
external glass fiber.
Weight is 60% of equivalent steel vessel
Storage vessel size
42 to 60 inch diameter, 20, 40, 80 ft long
Gas Pressure
Up to 3600 psi (1500 psi mid-scalemum)
Gas Temperature
Ambient
Vessel Size
Typical size 3200 dwt
Gas Transport Module (GTM)
Demonstration GTM
CNG Ship & Barge mounted

module
Large Articulated Tug Barge

(AT/B)
TransOcean (Canada)
Specification
Storage Capacity
150 mmcf to 1.2 bcf
Storage System
Pressure vessel consists of a high density polyethylene liner with

stainless steel end bosses and wrapped with external glass
and/or carbon fiber. Weight is one third of equivalent steel
vessel
Storage vessel size
42 to 60 inch diameter, 40 to 120 ft long
Gas Pressure
3600 psi
Gas Temperature
5 oC
Vessel Size
Panamax for 500 mmscf
TransOcean Module
Knutsen (Norway)
Knutsen Large Size
Knutsen Transportation
specification
Standard Size
Small Size
Large Size
2672
870
3900
20 MSm3
3.4 MSm3
30 MSm3
Length, o.a
276 m
182 m
325 m
Length, b.p
260 m
171.5 m
311 m
Beam (Bm)
54 m
29 m
59 m
Dm
29 m
16 m
29 m
13.5 m
8.5 m
15 m
Tballast abt.
11 m
7.3 m
11.6 m
DWT up to
20000 tons
3500 tons
30000 tons
Service Speed
15.5 knots
18 knots
18 knots
Specification
No. of gas Cylinders
Volume of Gas Carried
Tdesign
Pipe Data
42 in Dia.
19-38 m legth
Steel High Strength (X80)
CNG Licensors Comparison

Parameter
Licensors
Cossele
Vortrans
TransOcean
TransCanada
Knutsen
263
389
111
248
267
Material
Carbon
Steel
Carbon Steel
Fiber
Reinforced
Plastic
Composite
Pressure
Vessel
Carbon Steel
Maturity
Prototype
Testing
Prototype
Testing
Prototype
Testing
Prototype
Testing
Prototype
Testing
STL
STL
FPSO
FPSO
STL
10
-20
Ambient
Ambient
c. Pressure (psi)
3600
1885
3600
3600
3640
Safety
good
good
fair
fair
fair
Certification
ABS,
DNV
ABS, DNV
ABS
ABS
DNV
Ratio Capacity (cf/ft3)
Operability
a. Loading/Unloading
b. Temperature (oC)
Simple Economic Analysis

of CNG
Assumptions for Economic

Analysis
Capacities: 1, 0.6, and 0.4 MTPA

Rule of Thumb
Distance 2100 km ~ Donggi-West Java
Cost of capital 12%
Life service 20 years
Product cost CNG = Wellhead + (Capex + OM)
Full chain
Capex O&M cost of CNG

(high case)
Component
Capex
(US$)
Share(%)
O&M
(US$/year)
Share (%)
Tug
50,960,000
10.7%
12,700,000
58.9%
Barge
77,400,000
16.3%
2,000,000
9.3%
GTM
277,200,000
58.3%
1,300,000
6.0%
Transporter
405,560,000
85.3%
16,000,000
74.1%
Gas Treating
30,388,205
6.4%
3,765,654
17.4%
Loading
23,011,896
4.8%
702,285
3.3%
Unloading
16,325,829
3.4%
1,112,299
5.2%
475,285,930
100.0%
21,580,239
100.0%
Total
Source:TransCanada for 0.5 mtpa, 2130 km

US$ 950/tpa, and O&M cost 43 US$/ton (US$ 0.83/mmbtu).
Capital Cost Breakdown

CapEx Marine
6.4%
4.8%
3.4%
85.3%
Transporter
Gas Treating
Loading
Unloading
Capital Cost Breakdown
Economides, SPE 2008
Capex & O&M (low case)
Source: Hanranhan, 2006
250 mmscfd (1.92 mtpa)

and distance 750 nautical miles (~1400 km)
US$ 511-766/tpa, and O&M cost is 13 US$/ton (US$ 0.25/mmbtu).
Capex (high case)

Capital Cost (full chain of CNG)
= $ 475,360,000.00
Size
= 0.5 mtpa
Duration
= 20 years
Cost of Capital (i)
= 12 %
Cost Recovery Factor (CRF)
= 0.1339
Size of CNG (mtpa)
CNG (1)
CNG (2)
CNG (3)
0.6
0.4
Capex
772,224,598.26
540,069,319.88
406,617,087.56
Capex /mtpa
772,224,598.26
900,115,533.14
1,016,542,718.90
Capex/tpa
900.12
1,016.54
Annual Capex
72,315,281.93
54,446,028.02
Capex/mmbtu
2.58
772.22
103,400,873.71
2.21
2.91
Capex (low case)

Capital Cost (full chain of CNG)
= $ 1,115,000.00
Size of 1 train
= 1.93 mtpa
Duration
= 20 years
Cost of Capital (i)
= 12 %
Cost Recovery Factor (CRF)
= 0.1339
Size of CNG (mtpa)
CNG (1)
CNG (2)
CNG (3)
0.6
0.4
Capex
703,695,463.18
492,142,222.68
$ 370,532,874.00
Capex /mtpa
703,695,463.18
820,237,037.81
$ 926,332,185.00
Capex/tpa
703.70
Annual Capex
94,224,822.52
Capital Cost/mmbtu
1.81
820.24
65,897,843.62
2.11
926.33
$ 49,614,351.83
$
2.39
Product cost of CNG (high case)
Cost (US $/mmBtu)
7.00
O&M cost
6.00
Capex
5.00
Wellhead
4.00
3.00
2.00
1.00
0.00
1 mtpa
0.6 mtpa
CNG Plant Capacity
0.4 mtpa
Product cost of CNG (low case)
Cost (US $/mmBtu)
5.00
O&M cost
4.00
Capex
Wellhead
3.00
2.00
1.00
0.00
1 mtpa
0.6 mtpa
CNG Plant Capacity
0.4 mtpa
CNG Product valuation

Product Cost per mmbtu
Natural Gas (wellhead)
Capex
O&M
$ 1.5 2.0
$ 1.81 2.21
$ 0.25 0.83
Cost of Product
$ 3.56 5.04
$ 1.5 2.0
$ 2.11 2.58
$ 0.25 0.83
$ 3.86 5.41
$ 1.5 2.0
$ 2.39 2.91
$ 0.25 0.83
$ 4.14 5.74
CNG
CNG
CNG
1 mtpa
0.6 mtpa
0.4 mtpa
Technical Aspect comparison
Economical Aspect
CNG :
simple and inexpensive onshore
facilities
80-90% of the investment is in ships
and pressure containers
Business opportunities
Wellhead gas
2 US$/mmbtu
Potential Gas Price

5 US$/mmbtu
(1/2 diesel price
~ 9 US$/mmbtu)
Business opportunities
Xiuli Wang, 2008
Xiuli Wang, 2008
Natural Gas Contracts

(supply, transport and sales)
Lecture-3
Widodo W. Purwanto, *Hanan Nugroho

*Bappenas
Natural Gas Economic 2012
Outline
Types and key elements of
natural gas contract
LNG contracts
Types and key elements

of gas contract
Natural gas value chain and

gas contract agreement
GSA Between ?
Producers
Consumer
Trader
Natural gas EP Contract
Conssesion contract
Production Sharing Contract
Conssesion contract
Conssesion contracts: Tax/royalty conssesion
contract, conventional type North america,
Argentina, Australia, part Middle east
PSC
Production sharing contract (PSC), more
complex Asia, Africa, part of South america
and Middle East
Gas sales agreements

The gas sales agreement (GSA) is also known as a gas purchase
agreement (GPA) or a gas sales and purchase agreement (GSPA). These
agreements between a producing company or sales agent (seller) and a
consuming company (buyer)
Term. The term of a GSA can be as short as one day or as long as the
economic life of the field from which the gas is produced, the terms could
reach 20 or 30 years.
Quantity. Broadly speaking, there are two distinct types of volume
commitments contracts:
Depletion contracts and the more common supply contracts. Under depletion
contracts, also called output contracts, the producing company dedicates the
entire production from a particular field or reserve to a buyer.
In contrast, supply contracts commit the seller to supply a fixed volume of gas to
the buyer for fixed term, typically 20 to 25 years. The seller is responsible for
sourcing the gas, either from its own reserves or from third parties.
Two major types of

volume gas contracts
Depletion contract
Allocation of all the reserves economically recoverable
from a field or accumulation to the buyer
This type of contract is generally preferred by the
producer
Part of the risk is transferred to the buyer
The price will tend to be lower
Supply contract
The producer agree to supply an annual volume of gas
for a number of defined years
Gas supplies originates from several sources
This does not necessitate to show reserves to the buyer
This type of contract is generally preferred by the buyer
Gas sales aggrement (cont)

Price terms. Gas must be priced at a level competitive with alternate fuels in the
marketplace and provide an adequate return for all parties in the chain. Pricing may be
fixed, fixed with escalators, or floating.
Delivery obligation. The terms of delivery may be firm or flexible. Firm delivery
implies an obligation by the producing company or seller to deliver the specified
quantities over the term of the contract. If the delivery obligation is not fulfilled, the
seller may be obliged to pay damages or cover the costs of alternate fuels used by the
buyer. Flexible delivery obligates the producing company to make attempts to fulfill the
delivery obligation but does not require fulfillment of all the delivery obligations.
Take-or-pay (TOP) obligations. The basic premise of take-or-pay (TOP) is that the
buyer is obliged to pay for a percentage of the contracted quantity.
Delivery point. This is the physical location where gas is delivered to the buyer. It
could be at the gate of the power plant, the hub for a city grid, an interconnection of
two pipeline systems, the site of a compressor, international border, or the fence of an
LNG plant.
Gas quality. The GSA clearly states the quality of gas, including its maximum and
minimum heating values (in Btu/MMcf units); maximum level of impurities like oxygen,
CO2, SOx, and NOx; the delivery pressure; and water vapor content..
Key provisions of contracts
Contract Duration
Volume, capacity and tolerance

Volume. The first is the amount of gas, which can be sold and purchased,
the total amount of gas, which can be taken over the life of the contract.
Capacity, which is represented by the minimum rate at which the seller must
offer gas and the maximum rate at which the buyer may take gas. The
capacity is usually expressed as a daily quantity.
Tolerance clauses to allow to some extent for the unforeseen. Tolerances

affect the contract volumes only partially, but may affect any penalties due
for failure to live up to the contract.

Annual Contract Quantity (ACQ). It represents the maximum annual
quantity the supplier is obligated deliver to the buyer
The ACQ may be stated as an independent figure in the contract or
alternatively it can be sometimes expressed as the multiple of a Daily
Contract Quantity (DCQ)
ACQ = 365*DCQ.
Daily Delivered Rate (DDR) expresses the rate at which the sellers
facilities must be capable of delivering gas. It is usually expressed as
a multiple of the DCQ. The DCQ is multiplied by the fraction 1/load
factor.

Load factor is a very important component of the contract,
because it determines buyers flexibility. Lower load factor and
therefore higher daily volume flexibility offers to the buyer the
possibility to purchase more in the period, when he desires it.
Downward Quantity Tolerances states the amount by which a
buyer may fall short of its full Annual Contract Quantity (in a Take
or Pay gas sales contract) without incurring sanctions. If there is
no provision requiring the buyer to take supplementary volumes in
subsequent years to make good for the deficiency, the ACQ
becomes in effect the ACQ minus the DQT which we call Annual
Minimum Quantity (AMQ).
LNG Contracts
Types of LNG Sales Contracts

FOB (Free on Board)
- delivery point at connection between ship and loading facility
CIF (Cost, Insurance, Freight)

- delivery point at the buyers receiving terminal
- risk of loss passes to the buyers at loading point or an agreed point
on the trip
DES (Delivered Ex. Ship)

- delivery point at flange connecting ship to receiving
terminal
- the seller bears all costs and risks up to terminal
Shipping terms
Deliveries may be on Free-on-board (FOB) basis, where the buyer
takes ownership of LNG as it is loaded on ships at the export LNG
facility. The buyer is responsible for LNG delivery, either on its own
ships or ships chartered by the buyer. The contracted sales price
does not include transportation costs.
Cost-insurance-freight (CIF) basis, where the buyer takes legal
ownership of the LNG at some point during the voyage from the
loading port to the receiving port. The seller is responsible for the
LNG delivery, and the contracted sales price includes insurance and
transportation costs.
Delivered ex-ship (DES) basis, where the buyer takes ownership of
the LNG at the receiving port. The seller is responsible for LNG
delivery, and the contracted sales price includes insurance and
transportation costs.
Main Terms of LNG Contracts

Duration
Quantities
Build up volume
Annual Contract Quantity (ACQ)
Downward Quantity Tolerance
Upward variation
Take-or-Pay clauses
Shipping Agreements
Price
Quality
Build up and Plateau Arrangements
Main Terms of LNG contracts (1)

Duration
Mostly long term contracts, 20 years
Trend toward medium and Short Term contracts,
SPOT with deregulation
Buyers and Sellers prefer Long Term, to secure
financing of infrastructure
Build up volume
Sellers prefer fast build up to recover investment
Buyers prefer slow build up to follow market
growth
Compromise to be found

Plateau Quantities
ACQ (Annual Contract Quantity), expressed in
energy (TBtu/year) or in number of cargoes per year
DQT (Downward Quantity Tolerance): volume
that the buyer can defer without going to Take or Pay
obligation. Generally 10% with a maximum on cumulated
volume. May be subject to Make Up arrangement.
Upward Variation: additional volumes required by
buyers, depending seller ability to supply.
Take or Pay clauses

Obligation for the buyer to pay a cargo, even if
he cannot take it for market or other reasons
Transfer the market risk to the buyer, and
secures cash flow for the seller
The Downward Quantity Tolerance is negotiated,
generally leading to a Take-or-Pay level of 90%
(DOT=10%)
Volume under Take-or-Pay called Minimum Bill
Prices
Base price
Escalation formula: crude oil linkage
Frequency of calculation: quarterly or
monthly
Procedures for renegotiation, either
regular (every 5 years) or according to
change in context.
LNG Project Structure (1)
Bontang LNG Project Organization
Badak Train F
Project Finance
PT Badak
Plant use &
operation
agreements
Pertamina
Gas Supply
agreements
E. Kalimantan
Gas Producers
Japanese
Buyer
Offshore
proceeds
account, NY
LNG Plant
Turn key
contractors
Processing
agreements
Trustee
Gov. of
Indonesia
Loan
agreements
PSC
Producers
agreements
Banks
Source: International Advisory & Finance
LNG Terminal - Tolling Model

Contractual Structure Diagram
LNG Producer
Gas Sales
Agreement
END USERS
Terminal Used Agreement

(TUA)
LNG Receiving Terminal

Operation & Maintenance
Agreement
Company
Time Charter
Party Agreement
LNG Vessel Owner
LNG Terminal - Merchant Model

Contractual Structure Diagram
LNG Producer
END USERS
LNG Sale and Purchase

Agreement
Time Charter
Party Agreement
Gas Sales
Agreements
LNG Receiving Terminal

Operation & Maintenance
Agreement
Company
LNG Vessel Owner
Time Charter
Party Agreement
Gas contract and price vision
Structure of Natural Gas

Industry/Market
- lecture 1
Widodo W. Purwanto
Natural Gas Economic 2012
Outline
What is natural gas?
Structure of natural gas industry
What is natural gas market?
Gas trading & infrastructures
What is natural gas?
Natural gas components
Natural gas problem is volume

For the same energy content:
Characteristics and conversion factors

1 m3 of LNG = 630 m3 of gas
1 Ton of LNG = 2.22 m3 of LNG = 52 MMBtu
1,400 m3 of gas = 1.3 Ton of crude oil
49,500 Cft of gas = 9.0 bl of crude oil
1 Million Tons/year of LNG = 130 MMCFD of gas sales
= 142 MMCFD of gas at LNG plant inlet
A ship of 135,000 m3 = 60,000 Tons of LNG = 3 BCF of gas

1 TCF of natural gas eq. to 1 Million Tons of LNG for 20 years
Average Heating Values: Natural Gas: 1,000 Btu/Cft
Crude Oil: 5.8 MMBtu/Bl.
Oil and Gas Industry
The natural gas value chain
Upstream
Midstream
Downstream
Natural gas transportation

Pipeline
Liquefied natural gas (LNG)
Compressed natural gas (CNG)
SUPPLY
Gas to Solid (GTS)

Gas to Liquids (GTL)
MARKETS
Gas to Chemicals (GTC)

Gas to Wire (GTW)
Physical conversion
Chemical conversion
: pipeline, CNG, LNG, GTS

: GTL, GTC, GTW
Structure of Natural Gas Industry
Key Dates in the Deregulation of

the US Natural Gas Industry
Development of Competition in the British Gas Market
LNG market structure
Why Regulate?
Avoid monopoly
Regulation: exclusive teritories, setting
rate/tariff etc
Who ragulates: Regulatory Commission or
Gov.
Regulatory process: rolemaking, rate cases,
certificate cases, service standard, complaint
cases
Aim of Regulation
Approaches to Regulation
Policy instruments
Why Deregulation?
Competitive gas market
The market maturation cycle: regulation,
deregulation, commoditization, valueadded services
Market dynamics
Natural gas industry-Indonesia
Pertamina,
Total, Conoco,....
TGI, Nusantara Regas

Pertagas/Pertamina?
PGN
Small CNG companies
Natural gas industry (USA)
Natural gas industry (USA)
Natural gas industry (UK)
Natural gas industry (ARGENTINA)
Natural gas industry (Thailand)

UNOCAL
PTTEP
PTT Co Ltd/Plc
(Supply & Marketing)
TOTAL
Others
Supply & Marketing

Companies
100% shareholding
PTT Transmission
Company
Transmission
Companies
PTT Distribution
Pipeline Co.
Distribution
Companies
EGAT
Private Power Producers

IPP / SPP
End Users
Industrial Sector
What is
Market consist of
The physical (cash) market: business activity,
supply and demand fundamental,
transportation and physical transaction
Financial Market: Value, pricing and trading
IGU, 2006
Gas production/consumption by region
Gas consumption per capita
Chart of natural gas trade
Major gas trade movements
Gas domestic vs. export
KEN (2025)
2005
Produksi
Demand gas
Ekspor
Impor
8.13 bcf/d
3.38 bcf/d
4.75 bcf/d
~
9.15 bcfd
~
13.22 bcfd
1.02 bcfd
5.09 bcfd
Domestic gas market
Gas Pipeline Network

Medan Block
Block B-Duyong
West Natuna
- Singapore
Bunyu
Bontang
Duri-Grissik
Corridor-Singapore
Samarinda
So. Palembang Block
Pare-Pare
Jawa Barat
Jawa Timur
Existing
Planned
Future
Vogel Kop
Gas supply EU
Gas supply EU
JAPAN Gas Facilities
Japan gas pipeline supply option
TAGP
Australia gas network
US gas market
US gas network
North America gas supply
LNG Economics
Widodo W. Purwanto

LNG Technology Chain
LNG Trade History

1964 First plant in Algeria (Arzew), delivery to UK
1969 First LNG deliveries to Japan (from Alaska)
1970s Start up of Indonesia (Arun, Bontang), Abu Dhabi,
Libya, Brunei projects
1980s Start up of Malaysia, Australia projects
1990s Start up of Qatargas, Nigeria, Trinidad and RasGas
projects
2000 Start up of Oman LNG project
2006 Australia
2007 Norway
2009 Qatar II ( 7.8 Mtpa)
2009 Rusia
2010 Peru
LNG Plant
LNG Plant
LNG Plant
Number and LNG train capacity
Global LNG Capacity
LNG capacity and technology
LNG tech comparison
Floating LNG
World largest LNG exporter
LNG Supply: A plethora of new projects
LNG Terminal
Start-up LNG Terminal
LNG Terminal Capacity
LNG Terminal
Send-out capacity
LNG Fleet and Order
LNG carrier types
LNG ship capacity and age
LNG Chain Costs by Liquefaction,

Shipping & Regasification
Investment Costs: Site Preparation, Gas Treatment, Liquefaction,
Utilities & Ancillaries, LNG Storage & Loading, Other Infrastructure
Operating Costs: Personnel Expenses, Maintenance Cost,
Consumables, Overheads, Insurance and Taxes, Variable Costs
Investment Costs: Tanker Capacity
Operating Costs: Fixed Costs (crew), Maintenence Expenses,
Insurance, Overheads, Variable Costs (fuel, consumables, port charges,
taxes)
Investment Costs: LNG unloading facilities, LNG Storage, LNG
vaporization and sendout, Utilities, Infrastructure
Operating Costs: Fixed Costs, Maintenance Expenses, Insurance,
Overheads, Variable Costs (power, fuel, consumables)
PEUI -2007
Typical Costs for a project of 8 M

Tons/year
Cost Element
US$ (2003)
US$/MMBTU
(Billion)
Gas Production
1.0 - 2.0
0.5 - 1.0
Liquefaction
1.2 - 1.8
0.8 - 1.2
Shipping
1.0 - 2.0
0.5 - 1.0
Regasification
0.5 - 1.0
0.3 - 0.6
Total
3.7 - 6.8
2.1 - 3.8
PEUI -2007
Liquefaction cost
Capital Expenditure LNG plant
100,000 GPD = 160 TPD = 0.05 MTPA
Reducing LNG costs: a trend that is reversing?
Source: LNG Focus, 2006
Mid-Scale LNG costs
Source: Linde
Full chain base load LNG

capital cost breakdown
Source: Patel Foster Wheeler
Capex breakdown (Technip-Coplexip)

2 Train plant
Utilities
Offside
Common
45-65%
8-15%
20-40%
7-10%
Total LNG plant

Others
100%
15-30%
Total LNG project
115-130%
Train:
common/inlet facilities, impurities removal (acid gas, water,

mercury, sulfur), refrigeration/liquefaction, fractionation.
Utilities:
power generation, cooling water, other water, steam
fuel, air and nitrogen
Offside:
LPG storage & loading, condensate storage & loading,
loading jetty, flare and liquid blow-down, other fire protection,
drainage & waste treatment
Common: site infrastructure, control room, DCS,ESD, telecom, administration
& maintenance building
Others:
gas pipeline, site preparation, material offloading, residential area, spare
part, movable, training and start-up.
Liquefaction cost component

Plant capacity:
Total plant capital cost
Utilization rate
Annual cost of capital
5 mtpa
$ 1.2 billion
90%
$ 155 milion
Per Mcf cost of capital

Fuel
Taxes
Operating costs
$0.72/Mcf
$0.08/Mcf
$0.15/Mcf
$0.2/Mcf
Total cost of liquefaction $1.15/Mcf

Source: Bob Shively & John Ferrare, 2005
Source: Henry Lee, 2005

Kapasitas
Train
Capex
Capex total
Life time
Cost of Capital
CRF
Capex Annual
Capex Cost
O&M
O&M Cost
Biaya Bahan
Bakar
Fuel Cost
Liquefaction Cost
500
3,85
200.000.000
700
2.692.307.692
20
10,00%
0,1175
316.237.451
1,58
107.692.308
0,54
50
17.750.000
4
71.000.000
0,355
2,47
MMscfd
MTPA
MMBtu/Year
USD/TPA
USD
Year
%
USD/Year
USD/MMBtu
USD/Year (4% dari capex)
USD/MMBtu
MMscfd (10% feed)
MMBtu/Year
USD/MMBtu
USD/Year
USD/MMBtu
USD/MMBtu
Liquefaction Capital vs. Capacity
PEUI -2007
Capital investments
Small Scale LNG plant
Small scale LNG infrastructure
Shipping cost
Shipping Cost
Tanker cost
Mid Size (138,000 m3)
1993 ~ US$ 320 million/ship
2005 ~ US$ 170 million/ship
Large size (216,000 m3) ~ US$ 210 million
Daily carter rate
US$ 27,000/day US$ 150,000/day
PEUI -2007
LNG vessel cost
Fleet utilization and short term charter rates
Shipping cost
Kapasitas
500 MMscfd
200.000.000 MMBtu/Year
8.538.462 m3 LNG/year
Kapasitas
Tanker
Kapasitas Aktual
t loading
t unloading
Kecepatan
Jarak
day/year
Waktu
Perjalanan
Roundtrip (PP)
days in port
Waktu berlayar
/ Year
Kapasitas
angkut
Jumlah Kapal
O&M
USD/ Year
21.600.000 (4%Capex)
Portfees/station
port charges
80.000 USD
4.793.522 USD/ Year
150 m3 untuk LNG
labor
95%
Insurance
5.301.195 USD/Year
USD (15% OPEX
6.027.907 total)
USD (10% OPEX
4.018.605 total)
142,5 m3
64.772 Ton LNG
12 hour
12
18
33,34
3564
hour
knot
km/jam
km
350 hari
Misc
OPEX total
OPEX Cost
Boil off
Fuel Mix
LNG Price
107 Jam
41.741.229 USD/ Year

0,21 USD/MMBtu
(3% actual
0,03 capacity)
0,5
972 ton
50.523 MMBtu
USD/MMBtu
12 (ICP/8)
238 Jam
9,91 Hari
67,75 hari/Year
Fuel Oil Price
303.136 USD/Trip
MMBtu/liter
27 (Fuel Oil)
688.554 Litre (Fuel Oil)
1 USD/Liter
282,25 Hari
28,48 trip/Year
Total per Trip
688.554 USD/Trip
991.690 USD/Trip
Total per year

FUEL Cost
59.421.125 USD/ Year

0,3 USD/MMBtu
Shipping Cost
0,82 USD/MMBtu
4.058.882 m3 LNG/kapal/Year
3
Capex
180.000.000 USD/kapal
Durasi
CoCapital
CRF
540.000.000 USD
20 Year
10%
0,1175
Shipping cost
Source: Henry Lee, 2005
Shipping cost
Characteristics of trips
Typical Delivered cost of LNG
Shipping cost f (distance)

Henry Lee:
US $/mmbtu = (distance + 1650)/16107
distance is round trip in nautical miles
US $/mmbtu = 7 x 10-5 distance + 0.102

distance is round trip in km
Regasification cost
CAPEX LNG Terminal

Hazira India 2.5 mtpa (330 mmscfd) - US$ 600 million
Sempra 7.5 mtpa (1bcfd) US$ 800 -1000 million
Exxon-Qatar Petroleum, 2 bcfd, (2009/2010), jetty, 5 x
150,000 m3 full containement, 1.3 billion US$
Ken UK, 1.7 bcfd, 3 x 190,000 m3 full containement, 1
billion US$
Fujian/CNOOC, 350 mmscfd, 2 x 160,000 full
containement, 250 mm US$ (2008)
Quentiro, Chile, 400 mmscfd, jetty, 2x 160,000 + 10,000
m3 full containement, 775 mm US$ (2010)
Ecolectrica, Puerto rico, jetty, 90 mmscfd, 160,000
double containement, 150 mm US$ (2000)
LNG Regas cost
Small LNG terminal (dedicated)

(165 m3 - for Power generation) 1000 MW needs 130 mmscfd of gas
Typical Cost Breakdown Regas
Regasification Cost
Plant capacity
Total plant capital cost
Utilization rate
Annual cost of capital
1 bcf/day
$500 million
75%
$65 million
Per Mcf cost of capital

Fuel
Operating cost
$0.23/Mcf
$0.09/Mcf
$0.08/Mcf
Total cost of regasification
$0.4/Mcf
Note: SCV technology
Source: Bob Shively & John Ferrare, 2005
Regasification cost
Kapasitas regas
400 MMscfd
0,01072 Bcmd
140.000.000 MMBtu/Year
Capex
110.000.000 USD/Bcmy
412.720.000 USD
Durasi
20
CoCapital
10,00%
CRF
0,1175
Capex Annual
Capex Cost
O&M
O&M Cost
48.477.936 USD/Year
0,34 USD/MMBtu
20.636.000 USD/Year (5% capex)
0,15 USD/MMBtu
boil off
0,15%
Konsumsi bahan bakar
1,50% % Kapasitas storage

6 MMscfd
2.100.000 MMBtu/year
Fuel Price
12 USD/MMBtu
25.200.000 USD/Year
Fuel Cost
0,18 USD/MMBtu
Regas Cost
0,67 USD/MMBtu
Natural Gas Pipeline Economics
Widodo W. Purwanto

Type of natural gas transportation

How to bring natural gas from the fields to potential gas markets?
Pipeline
Liquefied Natural Gas (LNG)
GAS
SUPPLY
Compressed Natural Gas (CNG)

Gas to hydrate (GTH)
GAS
MARKETS
Gas to Liquids (GTL)

Gas to Chemicals (GTC)
Gas to Wire (GTW)
Physical transportation
Chemical conversion
: pipeline, LNG, CNG, GTH

: GTL, GTC, GTW
Concept map natural gas transportation
Source: Hetland
The European Gas Pipeline
The most extensive gas pipeline networks
IGU, 2010
Warner ten Kate et al, IEA, 2013
The Sumatran Gas Hub
MALAYSIAKerteh
Kuala Lumpur
NATUNA SEA
SUMATRA
Duri
Singapore
Batam
600 Kms
South
Jambi
B PSC
1. Corridor Block to Duri
540 Km 1999
2. Corridor Block to Singapore
530 Km 2003
3. Corridor Block to PLN Jkt
606 Km 2006
-----------1676 Km
======
Corridor PSC
J A V A
S E A
Jakarta
JAVA
West Java Gas Market

ASAHIMAS CHEMICALS
CHANDRA ASRI
OTHER PETCHEM
KRAKATAU
STEEL*
TANJUNG
PRIOK
MUARA
KARANG
MUARA
TAWAR
PGN
JAKARTA
EXOR-I
LPG MUNDU
CIKARANG
LISTRINDO*
26-12km
24-74km
SEMEN
PALIMANAN
12
BITUNG
16
CILAMAYA
JAKARTA
14-59km
WALAHAR
18-59km
LEGEND
Gas Consumer
10-27km
SERPONG
18-45km
TEGAL
GEDE
CIMANGGIS
Gas Processing Facility

Comp. Station
10-12km
BOGOR
SUNYARAGI
24
8-25km
Power Plant
24-45km
24-27km
24-51km
SEMEN
CIBINONG
CIKAMPEK
LPG
SDK
PUPUK
KUJANG
City
Existing Pipeline
Current Users
WEST JAVA
Potential Users
* Not taking gas/taking minimal amounts currently
PGN CIREBON
CIREBON
CITEUREUP
PGN BOGOR
LPG SDK
Source: Baskoro, 2011
Source: Baskoro, 2011
Nautical mile =1.85 km
Transportation cost of natural gas

via pipeline and LNG
Schwimmbeck, 2008
Engineering Yardsticks
Gas velocity: 5 15 m/sec
Pressures at consumers: 20-30 bar
Transmission pipeline pressure: 60 bar-100 bar
Compressor: interval of 150-200 km
Onshore pipeline CAPEX: ~20,000 US$/in-km
Annual operating cost of pipeline 0.5 -1.5% of the
total investment cost
Annual operating cost of compressor 4-5% of
the total investment cost
Offshore gas velocity: up to 30 m/sec
Offshore pipeline pressure: 100-130 bar
Offshore pipeline CAPEX: ~40,000 US$/in-km
Pipeline cost formula

Cost (in millions US$/mile) = 563,000 +35,600 x D
D: pipeline diameter in inches
Cost (in millions US$/km) = 350,000 + 871,000 x d
d: pipeline diameter in meters
Source: Seddon, 2006
Pipeline Cost
Source: Mohitpour
Steel price
2006
$900
2005
$850
2004
$800
2003
$450
$0
$200
$400
$600
$800
$1.000
Steel Plate Price per Net Ton
Pipe material cost
Cost ratio
Compressor cost formula

Cost (in millions US$) = 2,970,000 +1,120 x P
P: compressor power in hp
Cost (in millions US) = 2,970,000 + 1,500 x p
p: compressor power in kW
Rule of thumb: Pressure drop, Power & Fuel

consumption
50 km pipeline, 24 in, 200 PJ/y (500
mmscfd) dP=10 bar ~1.8 MW
Fuel consumption on annual basis 31.5
GJ/kW ~ 22.3 mmbtu/hp
50-60 km, fuel consumption 3% of the gas
transmitted
Principal working assumptions for

pipeline and LNG cost study
PT Perusahaan Gas Negara

for the South Sumatra to West Java Phase II Gas Pipeline Project
Tipikal Cost breakdown

pipa gas PGN
Levelized cost
mmscfd (kap.
700 Troughput)
Million Metric Ton Per
5 Annum (MTPA)
245.000.000 MMBTU/Year
258,475 PJ/Year
70 Bar
10 m3/s
15 m/s
0,92 m
36,27 inch
1000 km
70.000 USD/in km
2.538.553.781 USD
20
10,00%
0,1175
298.177.575 USD/Year
1,22 USD/MMBTU
Kapasitas
Tekanan gas
Flowrate gas pipa
Kec gas
Diameter
Distance
Capex
Durasi
CoCapital
CRF
Capex Annual
Capex pipeline
Distance Between
Compresion
Number stasion
50 km
20
MW (Gas Usage &
6,14 Value Sheddon hal. 90)
2.979.210 USD
59.584.200 USD
6.998.738 USD/Year
Power Required/stasion
Compresor Price
Compression Capex
Compressor Cost
0,03
O&M
129.906.899
Unit Cost O&M
0,53
USD/MMBTU
1,78
USD/MMBTU
Transportation Cost
USD/MMBTU
USD/Year (5% Capex)
BPH, 2011
BPH, 2011
BPH, 2011
Transmission tariff (toll fee)

1000 km, 200 PJ/y
Estimating pipeline tariff =
Cost of the pipeline/(Total volume of gas carried
over the lines lifetime in Mscf) x 3.35
financing
No.
Name of Project
pipeline project
Loan Condition
W. Java Transmission System
Gas Distribution (Jakarta, Bogor, Medan)
I = 12 %, grace period = 5 years, loan period = 15 years
Gas Distribution (Surabaya)
i = 13 %, grace period = 5 years, loan period = 15 years
Grissik - Duri
Grissik Batam - Singapore
S.Sumatra - W.Java
i = 0.95 % and 0.75%, grace period = 10 years, loan period = 40 years
W. Java Trans & Distribution Expansion
i = %, grace period = years, loan period = years
Cirebon - Semarang
Semarang - Gresik
10
E. Kalimantan Central Java
Financing the project: from public to private
No.Name of Project
1 W. Java Transmission System
2 Gas Distribution (Jakarta, Bogor, Medan)
3 Gas Distribution (Surabaya)
4 Grissik - Duri
5 Grissik Batam - Singapore
6 S.Sumatra - W.Java
7 W. Java Trans & Distribution Expansion
8 Cirebon - Semarang
9 Semarang - Gresik
10 E. Kalimantan Central Java
Source: Bappenas
Year L (km) D (inch)$ (MM)
Funding
Owner
1978 200+ 28
120
Pertamina Pertamina
1986
34
IBRD
PGN
1990
86
IBRD
PGN
1995 544 28
310
ADB, EIB
PGN
2001 478 28
415
ADB, EIB
PGN
2004 520 28, 32
440
JBIC, PGN
PGN
2005
120
PGN, IBRD
PGN
230
Private
Private
250
Private
Private
1,219
1,600 (est.) Private
Private
Natural Gas Price & Tariff

Lecture-2
Widodo W. Purwanto

Outline
Type of natural gas price
Natural gas pricing mechanism
LNG Price
Tariff
There is no World Prices for gas yet

Oil and gas are different commodities
Market maturity
Mature
In development
International
Regional
Different outlets
Captive markets
No captive market
Risks
Exploration risks
Market risk
Regional differences
Oil is an internationally traded commodity.. But the isolated regional nature of

gas markets, coupled with heavy government intervention in gas pricing, has
led to wide variations in pricing practices. There is no world gas price.
Jensen, 2011
World Natural gas and LNG Prices
Asian LNG Import Prices
Source: IGU, 2011
Harga gas bumi dalam rantai nilainya
Source: Weijermars, 2011
Pembentukan harga gas wholesale

(border/hub)
Source: IGU, 2011
Mekanisme Pricing
Gas on gas competition
Oil price escalation
Bilateral monopoly
Netback from final product
Regulation on a cost of service basis
Regulation on a social and political basis
Regulation below cost
No pricing
Source: IGU, 2011
World gas price formation, 2007
Source: IGU, 2011
Source: IGU, 2011
Gas-on-gas competition is the dominant pricing

mechanisms in the US and the UK. It means that the gas
price is determined by the interplay of gas supply and
demand over a variety of different periods (daily, weekly,
monthly, quarterly, seasonally, annually or longer). Trading
takes place at physical hubs, e.g. Henry Hub, or notional
hubs such as the NBP in the UK. Trading is likely to be
supported by developed futures markets (NYMEX or ICE)
and online commodity exchanges (ICE or OCM).
The demand curve is inelastic at high prices and low
prices, where there is little scope for fuel-switching,
and elastic in the middle range where demand for gas
can change readily depending on relative fuel prices;
The supply curve is identical to the long run marginal
cost curve; and
The average cost curve cuts the long run marginal
cost curve at its low point, and then the demand curve
at a lower price than the competitive market price.
Oil price escalation is the dominant pricing mechanism in

Continental Europe and Asia. It means that the gas price is
contractually linked, usually through a base price and an
escalation clause, to the prices of one or more competing
fuels, in Europe typically gas oil and/or fuel oil, in Asia typically
crude oil. Occasionally, coal prices are part of the escalation
clause, as are electricity prices. The escalation clause ensures
that when an escalator value changes, the gas price is
adjusted by a fraction of the escalator value change depending
on the so-called pass-through factor.
The gas price under oil price escalation will likely be above the
market-clearing price if oil prices are very high, and below if oil
prices are very low. Thus by summer 2008, when oil prices
were in the $120-130/bbl range, gas prices may have been
close to P2, while at low oil prices they could be around P3. If
oil prices are in the fuel-switching range, the oil indexed gas
prices will presumably be close to P1.
Bilateral monopoly negotiations were the dominant pricing

mechanism in interstate gas dealings in the former East
Bloc including the Former Soviet Union (FSU) and Central
and Eastern Europe. The gas price was determined for a
period of time typically one year through bilateral
negotiations at government level. There were often elements
of barter with the buyers paying for portions of their gas
supply in transit services or by participating in field
development and pipeline building projects.
The underlying valuation of the gas, the capital goods and
the services that changed hands in the intra-East Bloc gas
trade was opaque, with politics playing a major role
alongside economics.
Examples of gas pricing based on bilateral negotiations
may still be found in countries where one dominant
supplier, e.g., the national oil company, faces one or a
couple of dominant buyers, say, the state owned power
company and maybe 1-2 large industrial companies. A
number of immature developing country gas markets have
this structure.
Many Non-OECD countries still practice below cost
regulation, meaning that the gas price is knowingly set
below the sum of production and transportation costs as a
form of state subsidy to the population. Again the gas
company would be state-owned.
In some countries where a substantial proportion of
indigenous gas supply comes from oil fields with gas caps
or gas-condensate fields, the marginal cost of producing
this gas may be close to zero and as such it could be sold
at a very low wholesale price and still be profitable.
However, to the extent it is sold below the average cost of
production and transportation it would still be included in
the regulation below cost category.
Netback from final product means that the price received

by the gas supplier reflects the price received by the buyer
for his final product. For instance, the price received by the
gas supplier from the power sector may be set in relation
to, and allowed to fluctuate with, the price of electricity.
Netback based pricing is also common where the gas is
used as a feedstock for chemical production, such as
ammonia or methanol, and represents the major variable
cost in producing the product.
Under cost of service based regulation the price is

determined, or approved, by a regulatory authority, or
possibly a Ministry, so as to cover the cost of service,
including the recovery of investment and a reasonable
rate of return, in the same way as pipeline service tariffs
are regulated in the US. Normally, cost of service based
prices are published by the regulatory authority.
Pakistan provides an example of cost of service based
prices, with the wellhead price being the target.
Prices may also be regulated on an irregular social and

political basis reflecting the regulators perceptions of
social needs and/or gas supply cost developments, or
possibly as a revenue raising exercise for the
government. In all probability the gas company would
be state-owned.
Under bilateral monopoly or netback pricing situations

the price could, in theory, be higher or lower than the
market-clearing price P1. In practice, as will be shown
later, prices under these mechanisms in 2005 were
probably close to the P5 level, i.e. just above or below
average cost.
With below cost regulation the gas price could be at P4,
that is, materially below the average cost. Under cost of
service regulation the price would most likely be slightly
above the average cost at P5.
Regulation on social and political grounds would likely
lead to a price somewhere in the range between P4
and P5. In all cases, the price is likely to be below the
market-clearing price P1.
Harga gas wellhead, wholesale, retail di AS
Source: Weijermars, 2011
Perbandingan nilai gas bumi

30
US $ / MMBtu
25
20
Distribution
15
Processing
Netback
10
5
0
LNG - Badak Pipeline - Java
Methanol
GTL (FT
Diesel)
DME
Cost component of pipeline gas
Kondisi Industri Gas Bumi Saat Ini

Sebagai negara produsen gas - dapat memenuhi gas untuk
kepentingan dalam negeri sekaligus untuk penerimaan negara
dari ekspor gas
Harga gas domestik harga subsidi/regulated price
menyebabkan keengganan pemasok gas memenuhi kebutuhan
dalam negeri, yang berakibat kekurangan gas bagi konsumen
domestik dan investasi infratsruktur gas tersendat
Renegosiasi fixed gas contract untuk beberapa koridor (Jambi
Merang, ONWJ, Conoco Natuna B., Pagar Dewa..)
Mekanisme pasar gas masih belum jelas
Walupun potensi permintaan gas domestik tinggi, namun harga
gas domestik belum memberikan sinyal yang benar bagi
konsumen dan produsen.
Belum adanya transparansi cost breakdown dari sisi produsen
dan konsumen
Harga gas domestik vs. Harga LNG
Source: PGE, 2012
Oil/Gas Price ratio
Rasio harga minyak bumi terhadap

harga gas bumi
20
NG US
18
NG Uni Eropa
LNG Jepang
16
NG PGN
14
12
10
8
6
4
2
0
1989
1991
1993
1995
1997
1999
2001
2003
2005
Rata-rata rasio harga minyak bumi terhadap gas di:

- US sebesar 8,7
- Uni Eropa sebesar 7,6
- Jepang sebesar 6,2
- PGN berkisar 8-18
2007
2009
Pusat permintaan gas domestik Jawa dan Sumatra
Source: PGE, 2012
Source: PGE, 2012
Usulan Pengembangan Pasar dan

Harga Gas Domestik
Dengan adanya Regas LNG dan pipa transmisi
diperlukan pengembangan wholesale
border/hub (Jawa, Sumatra)
Mengembangkan formula harga gas hub oil
price escalation,..
Transparansi cost breakdown dari sisi produsen
dan konsumen termasuk transporter
Harga gas end-user, wholesale + toll fee, margin
downstream + tax
Usulan Pengembangan Pasar dan

Harga Gas Domestik (lanj.)
Perlu inovasi strategi mitigasi kedala-kendala
yang ada dalam pengembangan pasar gas
domestik termasuk pengembangan
infrastruktur gas (institusi, regulasi,
ekonomi,dll)
Mengembangkan hybrid market (central
planed dan Market oriented), Thurber, PES,
2011 sebagai langkah awal pengembangan
pasar gas domestik ke depan.
Instrumen Kebijakan dalam

Rantai Nilai Gas Bumi
Source: Thurber and Chang, 2011
Gas Hub?
Source: PGN and PGE
LNG trade
LNG Pricing Formulae in Asia (1)

1988 2004
Prices linked 85% to crude oil
10-15% premium over crude at around $18/bbl
Lower premium declines at higher oil prices and no
premium above $28-$30/bbl
S shaped curve in some contracts
2004+
New indices and price mechanisms to reflect
changing markets?

Reference Oil Price: JCC Japanese Custom Cleared average
price1988 2004
Price applies over an agreed range ($11 to $30/bbl), outside
that range there is an agreement to meet and discuss
Such a pricing basis initially developed with Japanese buyers
but has been adopted by S. Korea and Taiwan
In Japan the basic formula has been modified by adopting an
S shaped curve
No S curves in S. Korea and Taiwan contracts

Most contracts for LNG sold on an ex-ship basis use the
following pricing formula:
P(LNG) = A x P (Crude Oil) + B

where
P(LNG) = price of LNG in cents$/MMBtu
P (Crude Oil) =price of crude oil in $/bbl
B = a constant in cents/MMBtu
In many contracts:
A = 14.85
B = 70 to 90 cents
Basic LNG Pricing Formulae in Asia
Asian S Curve Price Formula
LNG Pricing Formulae in Asia

Linkage to crude oil is about 85%
In most contracts the average of Japanese Custom Cleared
(JCC) crude prices are used, but Indonesia uses the average
price of Indonesian crude exports
Inclusion of constant results in premium over crude oil parity
of about 10-15% at $18/bbl
Premium erodes as oil price increase and disappears at
around $28-30/bbl
Most price negotiations focus on the constant
The 14.85 factor is used in many contract is not exclusive
(especially in FOB contracts)
Tipikal formula harga LNG
Different Tariffication Methods for Gas

Transportation
Tariffication according to the distance: booking
capacity along each section of the tariff route
Tariffication according to pondered distance
(average distance)
Tariffication Entry-Exit: booking capacity at entry
and exit, without taking into account physical flows
between these two points
Tariffication post-stamp: a unique tariff applied for
injection and withdrawal on the overall territory

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Natural Gas Hydrate

Departemen Teknik Kimia

Natural Gas Economics 2012

Gas hydrate reserves

What is Natural Gas Hydrates?

Type of gas hydrates

Concentrates gas with a ratio of ~ 1:160

Source: U.S. Geological Survey

Sources: U.S. Geological Survey and Texas A&M University

One cubic foot of gas hydrate

Gas Hydrates Potential

The gas hydrate resouce

Gas Hydrates Potential

Gas Hydrates Potential

Global estimates place the gas volume

Gas hydrate stability

Migration of gas along faults and

Technology of NGH Recovery from

P-T equilibrium curve for watermethane system

Gas Hydrates Production Technology

Technology of NGH Recovery from

The use of a heat source of energy to

Technology of NGH Recovery from

When the reservoirs P is reduced,

Hydrate will continue to dissociate until

Technology of NGH Recovery from

By injecting chemicals to the sub-sea

The chemicals decrease the stability of the

Alcohols (methanol) and glycols are

Technology of NGH Recovery from

Effect of depressurization, temperature

The figure illustrates the

Why the interest in Gas Hydrates?

Hydrates plug flowlines

Methane Hydrates are a source of natural gas

Sensitive Communities use hydrates as food

Potential Impact of Natural Gas Hydrates

Heat From Buried

Ocean NGH transportation concept

NGH and LNG Comparison

Liquefied Natural Gas

Natural Gas: 600 Nm3

Properties of Gas Storage Media

much gas can be stored at milder conditions

Dissociation of the hydrates

Hydrate dissociates quickly under standard temperature and

The value of H dissociation is 10 20 kcal/mol of gas

Effect of methane hydrate temperature of the rate of

Methane hydrate pellets under

NGH pellet production

Flow sheet NGH production

Javanmardi et al, 2005

Javanmardi et al, 2005

CNG Marine Economics

Departemen Teknik Kimia

CNG ships add value for producers

Overview of CNG Marine

CNG marine transport chain

range 1.5-4.5% (CO2 maks 3%)

max. 16 ppm (H2S mak 4 ppm)

max. 65-112 mg/m3 (4-7 lb/MMscf)

CNG Logistic parameters

Dis tan ce(km)

tloading (h) tunloading(h)