KEPPEL Offshore and Marine Ltd (Keppel O&M) and Pavilion Gas are working with Indonesia's state-owned electricity provider PT Perusahaan Listrik Negara (PLN) to distribute liquefied natural gas (LNG) to remote islands and locations in West Indonesia.
This follows a discussion between the Singapore and Indonesian governments regarding bilateral energy cooperation during the Singapore-Indonesia Leaders' Retreat last year. A joint feasibility study that was subsequently carried out had demonstrated that cost-savings and mutual benefits can arise from this collaboration, said Keppel O&M in a press release on Thursday.
The three companies on Thursday also signed a heads of agreement (HOA) at the Singapore-Indonesia Leaders' Retreat in Singapore.
Under this HOA, the two Singapore companies will combine their expertise to deliver LNG using small vessels to floating and onshore LNG terminals. There, it will be regasified and used to generate electricity at PLN's power plants which range from 25 megawatts (MW) to 100 MW in capacity.
Besides bringing in revenue in a new business area for the two Singapore firms, the cooperation could also result in Indonesia buying cheaper LNG from Singapore for its needs in the western area compared to its own LNG plants that are further away. Indonesian officials have also mentioned the possibility of a LNG swap in local media.
Seah Moon Ming, CEO of Pavilion Energy and Pavilion Gas, said that the firm is pleased with the opportunity to collaborate with PLN and to enhance energy cooperation between Indonesia and Singapore. "Small-scale LNG enhances Singapore's role as a regional hub for LNG storage and reload, breakbulk and distribution."
Keppel O&M CEO Chris Ong said that the firm, with its comprehensive suite of solutions for every stage of the gas value chain, will be able to provide cost-effective, end-to-end solutions for its customers.
Small-scale LNG is an area that Keppel O&M and Pavilion Gas, a subsidiary of Temasek-backed Pavilion Energy, are actively pursuing.
Keppel O&M in May this year secured its first contract to build LNG carriers. The S$103 million contract is for two small-scale LNG carriers, each with a capacity of 7,500 cubic metres, for a subsidiary of Stolt Nielsen.
Demand is growing for small-scale LNG carriers especially for end-users located in remote areas not served by pipelines, Keppel said then. Tighter regulation on emissions will also encourage growth in small-scale LNG projects which are economical and quicker to bring to market.
Pavilion Energy had last year also signed a memorandum of understanding (MOU) with Indonesian state-owned energy firm Pertamina to work towards exploring opportunities in regional small-scale LNG projects, joint marketing, trading, procurement and investments.
Industry players have said that Indonesia, as a sprawling archipelago of 14,000 islands and with a population of about 250 million people, has the potential and ambition to become the most important small-scale LNG player in Asia.