• 11 Mag 2015

In an interview with Gastech News, Mr Theo Lekatompessy, President Director of PT Humpuss Intermoda Transportasi, discusses the possibilities of LNG winning over coal in the Asian markets, the use of the resource for transportation and the barriers to small scale LNG, which are however an obstacle to the sector as a whole.   Gastech News:  Can LNG win over coal in Asia? Theo Lekatompessy: Yes, in my opinion – due to 3 factors;
  • Buyer side: The pressure of establishing clean energy coming from NGO environmentalists follows the claim that natural gas is safer and cleaner, added to which, society is gaining influence and starting to impact the policy for some Asian countries such as Thailand.
  • Seller side: Coal handling the same MMBTU or KCal coal is more complicated as compared to natural gas – this automatically limits the growth of supply.
  • Supply and demand side: There are two different clusters of players; within two different classes. The producer/exporter and buyer/ importer of natural gas are mostly a group of developed and rich countries which have greater influence at the stage of international trade in comparison to the group of producer/exporter and buyer/ importer of coal which come from more emerging countries.
Gastech News:  What are the benefits of using LNG as a transportation fuel, especially in shipping and trucking? Theo Lekatompessy: The benefits arise from different perspectives, especially for ASEAN countries. Let’s observe Indonesia as an example, which imports 500.000 barrel per fuel oil a day to fulfill the national demand and spends around US$15 billion national reserve to pay for it. There is no other choice than to promote gas/LNG as a new energy backbone, thereby diversifying from fuel oil. Coal, as we mentioned above, has its constraints when it comes to being distributed extensively to end users. Gastech News: What are the key challenges to overcome to accelerate the use of LNG as transportation fuel in Asia? Theo Lekatompessy: For countries located in continental Asia (Malaysia, Thailand, China, etc) the main challenge is the installation of retail facilities, such as integrated pipe networks with issues such as land titles and overlapping the established present infrastructure. Meanwhile, for island countries (such as Indonesia and the Philippines) and developing countries (such as Myanmar, India and Vietnam) the problem is more fundamental:
  • Building top down infrastructure to create an integrated connection
  • The National Policy of Energy subsidy, which impacts how much the price of LNG is at the end-user level after government subsidy, and considering whether it is more attractive than fuel oil and ethanol
From a general point of view, most equipment is designed for fuel oil input – then it has to be converted to a dual mode, so the questions from users are:
  • Is it compulsory regulation/law?
  • Who pays the conversion cost? Would it be a bank loan?
  • Is there any long-term guaranteed supply of LNG from the global market/government to users after they do the conversion at the competitive price (in comparison to fuel oil)?
Gastech News: Talking about the small-mid scale LNG market, what are the key barriers for developing small-mid scale LNG projects in Asia? Theo Lekatompessy: A supply chain is like a waterfall or river, a top-down model or from big to medium then small scale. The key issues facing the real world in developing small-mid scale LNG facilities are as we discussed previously:
  • Guarantee of supply; is there any long-term guaranteed supply for national consumption? In the case of the 3 biggest exporters in Asia, such as Indonesia, Malaysia and Brunei – nowadays most of their LNG is for export (to fill national reserve and finance national budget) and not for the domestic market
  • Infrastructure; is there sufficient top-down arrangements and sufficient infrastructure coverage to support a national/regional LNG supply chain, which in the downstream sector will provide the small-mid scale LNG facility?
  • Price issue for retail, is the government subsidy or market magnitude offering a competitive price for LNG compared to other fuel sources per MMBTU?