TOKYO -- Tokyo Gas and state-owned Indonesian oil company Pertamina will build a liquefied natural gas receiving terminal in Indonesia to accommodate rising demand for the fuel as the economy grows.
The terminal in Bojonegara, West Java, will cost around 100 billion yen ($810 million) and is slated to begin operation in 2018. It likely will have a storage capacity of 200,000 to 400,000 kiloliters. The LNG will be sold to domestic factories and natural-gas-fired power plants.
This will be Indonesia's first purpose-built LNG receiving terminal. The country has previously stationed small tankers at sea to receive LNG and converted tanks at land-based export facilities.
Tokyo Gas and Pertamina will set up a joint venture to run the import terminal. Mitsui & Co. is expected to take a stake in the company, with the Japan Bank for International Cooperation potentially participating as well.
Tokyo Gas will offer expertise gained from LNG export operations and take part of the revenue. It aims to use terminal operations as a foothold to broaden its involvement in the LNG business.
The terminal plans were disclosed by Pertamina President and CEO Dwi Soetjipto during a visit to Japan. It is the first step in a strategic LNG alliance between Tokyo Gas and Pertamina initiated with a memorandum of understanding signed in February. Though Indonesia is an LNG exporter, economic growth has created a need for facilities for domestic consumption.
Pertamina, founded in 1957, is among Indonesia's biggest state-owned companies, handling oil and gas extraction, refining and sales. It has had a close relationship with supplier Tokyo Gas.
Japan's electricity retail market opens fully in the spring, with the natural gas market expected to follow suit in 2017. Competition is set to escalate, and the market likely will see little growth. A full-fledged foray into Asia by Tokyo Gas may accelerate overseas expansion by Japanese utilities.