Tuesday, March 10, 2009

Indonesia Oil, Gas, Mining Updates

5 Reports: (Courtesy Joyo News Service)
- Indonesia TPPI to enter gasoline sector in May after plant revamp
- Germany Eyes Development Of Indonesia's Geothermal Potential
- No Sanctions On Indonesian Coal DMO Defaulters This Year
- South Korea To Produce Wood Pellet Fuel In Indonesia
- Indonesia VP Wants Coal Power Plant For Babel To Aid Development
Platts Commodity News
March 10, 2009 Indonesia TPPI to enter gasoline sector in May after plant revamp
Sydney-- Indonesian oil refiner and aromatics producer Trans-Pacific Petrochemical Indotama hopes to start producing gasoline for the first time by May, a company source said Tuesday.
TPPI completed last month a revamp of its aromatics complex at Tuban, East Java, and is now be able to produce aromatics and gasoline, exclusively and concurrently, when economics favor.
The company is in talks with the ministry of finance for the supply of condensate. "We expect feed [condensate] from the government soon," said the source.
TPPI used to buy condensate from state-owned Pertamina and in the open market. Under a new arrangement, the firm will receive condensate for free from the finance ministry, in return for selling gasoline to Pertamina priced off a formula based on the spread between gasoline and condensate values.
TPPI's aromatics complex can now produce up to 50,000 b/d of gasoline. Its aromatics capacities are 50,000 mt/year of paraxylene, 350,000 mt/year of benzene and 100,000 mt/year of orthoxylene. The company stopped producing aromatics around mid-2008 due to poor margins.
TPPI is a joint venture among Pertamina (15%), the local TubanPetro (59.5%), Siam Cement (20.4%), and Sojitz (4.25%) and Itochu Corp (0.85%). The shareholders funded the plant revamp. The government of Indonesia wants to reduce the country's oil imports.
Joanna Lim, joanna_...@platts.com
Germany Eyes Development Of Indonesia's Geothermal Potential
JAKARTA, March 10 Asia Pulse - Germany is interested in investing in the geothermal business sector in Indonesia, German Minister of Economics of the State of Baden-Wurttemberg Ernest Pfister said.
"We see that Indonesia has a big geothermal potential," the German minister said after leading a German delegation at a meeting with Indonesian Minister of Industry Fahmi Idris at the Industry Ministry's here on Tuesday.
Pfister said that Germany was keenly interested in investing in geothermal business because Germany had the technology needed to develop geothermal energy potentials.
In the meantime, Industry Minister Fahmi Idris said he welcomed the German intention. "I would like to say that Indonesia is very open to investment," he said.
But Indonesia-Germany cooperation could not yet be realized as there was no Free Trade Agreement (FTA) between Indonesia and the European Union.
"I proposed to them that they should consult with the German foreign minister and the chairman of the European Union in order to follow up the talks between Indonesia and Germany," the minister said.
He said that Indonesia would open itself wide, particularly to the German investors who were willing to invest and develop power energy using geothermal as a raw material.
No Sanctions On Indonesian Coal DMO Defaulters This Year
JAKARTA, March 10 Asia pul'se - The Indonesian government has yet to impose sanctions on coal producers who failed to meet their their domestic market obligations (DMOs) this year but will ask them to make amends, an official said.
Bambang Gatot Ariyono, director for mineral and coal affairs at the Ministry of Energy and Mineral Resources, said here over the weekend that as contractors of the government, coal producers should actually abide by the agreement they had reached together.
"But next year, the government will take measures against them based on a government regulation (PP) on DMO now being drafted," he said.
He said the sanctions based on the PP on DMO included cuts in production quotas. Besides producers, buyers who did not purchase their coal supplies based on agreement will also be
subjected to sanctions in the form of cuts by half of their quota.
Coal buyers are also prohibited from exporting the coal they have bought from producers in whatever reasons.
The DMO provision will be included in the government regulation (PP) as an implementation of Law No. 4 / 2009 on coal and mineral business activities.
He said that the government was preparing four PPs, namely PPs on mining, mineral and coal exploitation, guidance and supervision of mining, and reclamation and post-mining
activities. The DMO provision will be included in the PP on mineral and coal business activities. It is expected that the PPs would be accomplished in the mid of this year.
Pending, the completion of the PP, the directorate general for mineral, coal and geothermal obliges coal producers to meet the coal needs of the domestic market. The government had reached agreements with coal producer companies where the latter were obliged to supply 68.3 million tons of coal to the domestic need in 2009. Of the 68.3 million tons, some 41 million tons are designed for power generators, of which 33 million tons are to be supplied to PLN's power plants.
South Korea To Produce Wood Pellet Fuel In Indonesia
SEOUL, March 9 Asia Pulse - South Korea signed an agreement with Indonesia Friday to produce wood pellets that are cheaper and cleaner to burn than fossil fuels.
The memorandum of understanding between the Korea Forest Service and Indonesia's Forest Ministry calls for 200,000 hectares of forest land to be set aside to produce wood for pellets starting in late 2010.
The Daejeon-based state forestry service said that the deal signed on the sidelines of President Lee Myung-bak's visit to the Southeast Asian country gives the South Korean government a free 99-year lease on Kalimantan Island, with Indonesia benefiting from investment that can lead to jobs for its people.
"The forest service will provide administrative support, with the actual building of the pellet-making facilities and everyday operations to be carried out by private companies," an official said. He said the size of fuel production will be determined after the forest has been examined in detail to check for usable plants.
"The process will involve both cutting trees and planting to make up for those used as fuel," he said.
Wood pellets are made from finely ground and compressed wood that is cheap to use, has relatively good fuel qualities and does not release as much greenhouse gas as refined fuel products.
The cylinder-shaped pellets on average have lower heat value than diesel fuel, liquefied natural gas (LNG) and kerosene, but could provide an 99-square-meter living space with adequate heat for 1.8 million won (US$1,160) per year.
This is better than the 4.2 million won needed when burning diesel, 2.0 million won for LNG and 3.0 million won for kerosene. The pellets have also been found to produce 12 times less greenhouse gases than diesel fuel.
At present, South Korea's wood pellet consumption is small and generally limited to use in some rural communities and greenhouses. It has only one operational wood pellet facility,
with two more to be opened within the year. The majority of products used are imported from China and Canada.
The 200,000 ha deal, meanwhile, increased the size of forest land leased by South Korea in Indonesia to 700,000 ha.
The 500,000 ha leased in 2006 under a similar long-term arrangement is used by companies like SK Networks Co. (KSE:001740) and Inni Joa Co. to grow timber for wood products
and palm oil.
Indonesia VP Wants Coal Power Plant For Babel To Aid Development
PANGKALPINANG, March 9 Asia pulse - As power supply in Bangka Belitung (Babel) is not enough for development activities, Indonesia vice president Muhammad Jusuf Kalla wants to construct a coal-fired power plant (PLTU) in the province.
"The core of the problem has to do with state power company PT PLN," he said when speaking of increased power supply and expansion of the Depati Amir airport in Pangkalpinang, Babel, on Sunday.
Babel governor Eko Maulana Ali said since the establishment of Babel province in 2001, development in the province had been accelerated, including roads, airport, seaport, the economy and social facilities as well as the eradication of poverty now still reached 12.5 per cent.
"We cannot depend on tin forever, and start building other development sectors, such as tourism and fisheries," he said.
He also expressed regret that power supply in the province reached only 46 megawatts (MW), while demand on peak hours reached 44 MW, so that the remaining two MW forced PLN to impose rotating power cuts.
This condition had prompted potential investors to change their mind and cancelled their investment plans in Babel. To cope with the situation, the local administration planned to
increase the power supply by building the PLTU Bangka with a capacity of 2 x 30 MW, and PLTU Belitung with a capacity of 2 x 16.5 MW , as part of the 10,000 MW PLTU project crash program.
The general manager of Sumatra II PLN, Nasar Iskandar, said this year would see the installation of a 10 MW diesel power plant in the transitional period and a ground breaking ceremony would soon be held for the first stage 10,000 MW project scheduled for
completion in 2010, and the second stage in 2011.

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