平成２６年度「地球温暖化対策技術普及等推進事業」

Study on Opportunities and Issues

in introducing mini LNG facilities and

equipments in Indonesia Final Report

Nomura Research Institute

ii

Contents

List of Graphs and Tables ............................................................................................... iv

List of Graphs .............................................................................................................. iv

List of Tables ............................................................................................................... vi

1. Introduction ...............................................................................................................1

1.1. Background .........................................................................................................1

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

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

2.4.1. Interviews .....................................................................................................8

2.4.2. Workshops ....................................................................................................9

3. 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

iii

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

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

4. Analysis ....................................................................................................................34

4.1. 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

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

5.1. Conclusion .........................................................................................................49

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

iv

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

v

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

vi

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

1

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 doesn’t 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

2

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.

3

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.

• Fuel for transportation

• Power generation

•テキスト•テキスト•テキスト• On site liquefaction

facilities

• Power generation

• Gas well

Exploration, exploitation

(Natural gas)

On site liquefaction

(Natural gas->LNG)

Transport(LNG)

Onsite storage

tank(LNG)

On site vaporization

(LNG->Natural

gas)

Direct use of LNG(LNG)

Main scope

Figure 1 Project scope in the value chain

4

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

mini-LNG transport and fuel

conversion business in

Indonesia

Needs survey for the local end users and estimation of

potential market size as well as confirmation of promised

areas and identification of potential clients.

Confirmation of current regulations, technical standards and

licenses for mini-LNG facilities and equipments.

Business model development including identification of

service menu.

Necessary investment amount and financing methods

Economic feasibility study

2. Proposal of policy reform

to promote mini-LNG

transport and fuel

conversion by using LNG in

Indonesia

To check the current regulations, technical standards and

guidelines to facilitate introduction of Japanese technologies.

To propose necessary regulations to ensure safety if the

government of Indonesia has not introduced yet.

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.

5

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

6

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 don’t 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

7

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

8

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 Interview items

Governments Migas 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

Transport

Maritime

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

transport

division

Regulations and technical standard of

mini-LNG transport lorries for land

transport

Coordinating ministry of

economic affairs (JCM

secretary)

Reporting the progress of study

Energy

companies

Pertamina Discussion on the progress of technical

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

9

Interviewed organizations Interview items

Sharing the technical knowledge and

knowhow of the operation of mini-LNG

facilities and equipments

Distributers Member companies of

natural gas association of

Pertagas Niaga

Discussing business opportunities

Discussing actual needs for mini-LNG

facilities and equipments in Indonesia

Sharing the technical knowledge and

knowhow of the operation of mini-LNG

facilities and equipments

Potential end

users

The government of Kutai

Timur

Confirming the demand of fuel conversion

of their own captive power plant

Checking site conditions

United Tractors 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.

10

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

11

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

12

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

13

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

LNG tank container railway transport

Trailer transport Trailer transportContainer freight train transport

Freight

Station

Freight

Station

Satellite

facilities

Satellite

facilities

LNG

Receivable tank

LNG

Receivable tank

Figure 8 Image of Satellite transport system

14

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.

Source）http://eee.tokyo-gas.co.jp/industry/indus/lng.html

SodegauraNegishi

Hitachi

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

15

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

Himeji

Kanazawa

Toyama

Freight railway transport

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

16

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.

Takamatsu

Himeji, Osaka Gas

Kitakyushu, Kitakyusyu LNG

ImabariTokushima

Kouchi

380km

145km

130km

70km

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

17

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.

~~~

EvaporatorReceivable tanks

Natural gasLiquid gas

Factories etc.

Cool heat

recovery power

generation

Refrigerated

warehouse;

Production of

liquid airs

Power generation, city

gas use, and

Cogeneration system for

energy saving

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

18

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

Terminal

Commissioning Capacity (t) Temperature Goods

Nihon Cho

Teion

Negishi 1974 33260 -40℃~ - 55℃ Royal jelly, squid, octopus

-60℃ Tuna, amberjack

-50℃～-60℃ Sweet shrimp, urchin,

salmon roe, ice cream

Saibu gas

engineering

Fukukita 1982 27600 -30℃ Shrimps, Crab, Frozen food

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

terminal

Commissioning Capacity (×1000 Nm3/h) LNG through

put (t/h) Liq. N2 Liq. O2 Liq. Ar

Tokyo Ekika Chisso Negishi 1971 13.5 6.5 0.25 54

Tokyo Sanso Chisso Sodegaura 1978 25 6 0.38 48

Chubu Ekisan Chita 1980 10 5 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 4 0.15 -

19

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

terminal

Commissioning Capacity (t/day) LNG through put

(t/h) Liq. CO2 gas Dry Ice

Kinki Ekitan Senboku I 1980 120 3.6

Chita Ekisan Chita 1982 162 72 9

Tokyo Tansan Negishi 1983 86 72 5.2

Osaka Tansan Senboku I 2004 48

Shin-nihon Sekiyu Seisei Mizushima 2006 370 3

20

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

terminal

Output

(MW)

Technology LNG through put

(t/h)

Pressure of gas

(MPaG)

1979 Senboku II 1.5 Rankine cycle 60 3

1981 Chita-Kyodo 1 Rankine cycle 40 1.4

1982 Senboku II 6 Rankine cycle/Direct

expansion

150 1.7

1982 Tobata 9.4 Rankine cycle/Direct

expansion

150 0.9

1983 Chita 7.2 Rankine cycle/Direct

expansion

150 0.9

1984 Chita 7.2 Rankine cycle/Direct

expansion

150 0.9

1984 Niigata 5.6 Direct expansion 175 0.9

1985 Negishi 4 Mixed Fuel Rankine

cycle

100 2.4

1986 Higashi-Ogishima 3.3 Direct expansion 100 0.8

1987 Himeji 2.8 Rankine cycle 120 4

1987 Senboku I 2.4 Direct expansion 83 0.7

1987 Higashi-Ogishima 8.8 Direct expansion 170 0.4

1989 Yokkaichi 7 Rankine cycle/Direct

expansion

150 0.9

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

21

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.

Industry use

Non-industry use

(Number of units)

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

22

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.

23

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

24

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.

25

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

26

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

27

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

（mm）

Length

（mm）

Height

（mm）

Weights on

axis（t）

20ft 30ft 40ft

Class I 2500 18000 4200 10 ○ ○ ○

Class II 2500 12000 4200 8 ○ ○ ×

Class III 2100 9000 3500 8 × × ×

Special Class 2500 18000 4200 10 ○ ○ ○

28

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.

End users(Still negotiating)

LNG provider Distributers

Under negotiation

Special purpose vehicle

(Indonesian company established by Japanese companies)

Figure 20 Considerable local partners

29

Table 8 Role of each participant

Stakeholders Role

Pertagas Niaga

(Pertamina)

To develop loading facilities of LNG at Bontang and other LNG

receivable tanks

To provide LNG at Bontang and other location to distributors

Distributers To develop the end users of LNG as clients

To prepare transportation tools like ISO containers and satellite

facilities

To transport LNG in small scale to end users

End users To introduce LNG use equipments

To consume LNG as fuel

Japanese consortium 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

30

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

Vaporization

Use

Natural gas

related

AM0014 Natural gas-based package cogeneration ○

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

improvement

AMS-III.BC. Emission reductions through improved

efficiency of vehicle fleets

▲

31

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 CDM methodology JCM Methodology

Baseline Project Monitoring methods

Natural gas

related

AM0014 Natural gas-based package

cogeneration

Without cogeneration

system

With cogeneration system

and improved energy

efficiency

Consumption of natural gas in cogeneration plant

Power supply for end users

Heat supply for end users

AM0088 Air separation using

cryogenic energy recovered

from the vaporization of

LNG

Without binary power

generation

Energy recovery by binary

power generation

Saving transmitted power

supply

Power generation by binary power generation

Reduction of fuel consumption by PLN in east Kalimantan

considering fuel mix in PLN Kalimantan Timur as much as the

amount reduced by binary power generation.

ACM0009 Consolidated baseline and

monitoring methodology for

fuel switching from coal or

petroleum fuel to natural gas

Energy consumption

before fuel conversion

Energy consumption after

fuel conversion

Emission coefficient of CO2 of natural gas and net heat amount

Energy efficiency of production process using natural gas

ACM0011 Fuel switching from coal

and/or petroleum fuels to

natural gas in existing power

plants for electricity

generation

Power generation

before fuel conversion

Power generation after fuel

conversion

Fuel consumption, heat amount and emission co-efficient from

project

Transmitted power from grid or to captive equipments

32

Category CDM methodology JCM Methodology

Natural gas

related

AMS-III.AY. Introduction of LNG buses to

existing and new bus routes

Transport of LNG by

diesel tracks between

Bontang and

destination

Transport of LNG by CNG

tracks between Bontang and

destinations

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

CNG track’s fuel consumption

Number of track operations

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

line

Fuel

consumption

efficiency

improvement

AMS-III.BC. Emission reductions through

improved efficiency of vehicle

fleets

Transport of LNG by

the second lightest

container between

Bontang and

destination

Transport of LNG by the

best lightest container

between Bontang and

destination

Diesel consumption by the second lightest container for setting

baseline by average and by annum

Diesel consumption by the best lightest container for setting

baseline by average and by annum

Improved tonnage-kilo meter method will be used for

calculation. The gap between the best and the second lightest

container’s weight will be converted to loading rate.

http://www.meti.go.jp/committee/downloadfiles/g50910a11j.pdf

Number of track operation

33

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

34

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

456km

More than 500km

About two days journey

Sangatta

75km

Samarinda

Figure 22 Project location

35

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

←Bontang

←Samarinda

←Balikpapan

120km

120km

70km

Figure 23 Location of Sangatta

36

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)

37

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 doesn’t 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.

Kutai Timur Gov. Captive power plant

（3.5MVA）

Sepaso Public use diesel generators

（250KVA）

Sangatta Public use diesel generators

（250KVA）

Makuti Jaya

Public use diesel generators

（100KVA×2）

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

38

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

39

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 Number Unit Note

Before (Diesel) Capacity of diesel

power plants

3,500 kW 500kVA×7

Availability 30 %

Diesel fuel price 980 USD/KL

Operation cost 60,000 USD/yr

2 operators×

30000USD/yr

Fuel transport cost 60,000 USD/yr

2 operators×

30000USD/yr

After (Gas) Gas engine power plant 3,000 kW 1500kVA×2

Availability 40 %

Operational hours 3,800 hr/yr

Power generation 11,400,000 kWh/yr

Thematic calorie of

natural gas 37.25 MJ/N㎥

LNG satellite facilities 1 set

ISO container 30ft 6 sets

LNG price 20 USD/MMBTU

Operation cost 60,000 USD/yr

2 operators×

30000USD/yr

Fuel transport cost 120,000 USD/yr

4 operators ×

30000USD/yr

Maintenance costs 3.5 JPY/kWh

Lease conditions Durable years 10 Year

Interests and other

expenses 20 %

CO2 emission

coefficients

Electricity 0.9 kg-CO2/kWh

Gas 2.29 kg-CO2/m3

Diesel fuel 2.58 kg-CO2/L

Exchange rate 119 JPY/USD

40

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 Current After fuel conversion Note

Grid electricity kWh/yr 0 0

Diesel fuel kL/yr 3,800 0

LNG(NG) Nm3/yr 0 2,754,362

■Fuel costs

Items Unit Current After fuel conversion Note

Diesel fuel USD/yr 3,724,000 0

LNG USD/yr 0 2,203,490

Cost reduction USD/yr - 1,520,510

Fuel costs reduction rate % - 59%

■Capital investment for fuel conversion

Items Units Capital investment [USD]

Power generator set 1,261 USD/kW 2 3,781,513

Compressor 84,034 USD/Unit 2 168,067

LNG satellite 714,286 USD/Unit 1 714,286

LNG satellite BOP and construction 300,000 USD/Unit 1 300,000

ISO container (30ft) 126,050 USD/Unit 6 756,303

trailer head 40,000 USD/Head 6 240,000

Total 5,960,168

■Running costs

Items Unit Current After fuel conversion Note

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 0 715,220.17

Total 3,944,000 3,434,004

Gap USD/yr 509,996

41

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 Current After fuel conversion

CO2 emission amount t-CO2/yr 9,804 6,307

CO2 reduction amount t-CO2/yr 3,497

CO2 reduction rate % - 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

42

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

43

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 20ft 30ft 40ft

Air water Loading weight 10.9

Dead weight 9.1

Total weight 20.0

Chart 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.

44

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 2,754,362 Nm3/yr

ISO Container capacity 23.7 N㎥/turn

ISO Container use 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 (use) 3,497 ton-CO2/yr

Annual CO2 reduction (Total) 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

45

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

Transport

Diesel consumption by the best lightest container for setting baseline by

average and by annum

Improved tonnage-kilo meter method will be used for calculation. The gap

between the best and the second lightest container’s 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.

SPCService line①Rental or leasing and

maintenance of the equipments②Consulting of LNG equipment operation

LNGLocal distributer

Products

&

Tech. Service

Finance

&

Operation

Rental

&

Maintenanc

e service

LNG

LNG Kutai

Timurgovernment

Leasing fee

+

LNG charge

Leasing fee

Rental feeOwnership of

facilities and

equipments

Figure 31 Service supply scheme

46

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.

Phase2-3(Sea Trans.

Tanker)

Phase2-1(Scale up)

Land transport

Land transportSea transport Storage

Storage

Storage

Filling facilities

Loading facilities Loading facilities

Phase2-2(Sea Trans.

Barge)

Land transportBarge system StorageGantry Crane Top lif ter

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.

47

Phase2-3(Sea Trans.

Tanker)

Phase2-1(Scale up)

Phase2-2(Sea Trans.

Barge)

Jan.2015 Jan.2016 Jan.2017 Jan.2018

0.8 –2 MMSCFD

Loading capacity

30 MMSCFD

Loading capacity

small LNG Carrier

Loading capacity

Design

of

whole

picture

of 2nd

phase

f ield

test and

procure

ment

Construction satellite

facilities and procurement

ISO containers

Field test

Finding

potential

usersConstruction 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

48

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.

49

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.