Marketability

Bow’s assets are located in a region with proven production and existing transportation infrastructure.

The recently completed 350 km Arun-Belawan gas transmission line offers cost-effective transportation for South Block A and Bohorok gas to a higher price market throughout North Sumatra.

There are a number of potential gas buyers and suppliers in Sumatra including:

Aceh Region Buyers

  • Gas demand predominantly comes from a fertilizer company and is sold at approximately $8/MMBTU
  • New power will be developed to support electricity demand in Aceh (mainly during peak load) which is currently supplied from Medan. This could include the backing out LNG re-gas at around $12-$16 MMBTU

 

North Sumatra Buyers

  • The Arun-Balawan pipeline has opened up considerable markets to gas in Arun throughout North Sumatra
  • PLN has existing 800 MW CCGT power plant capacity in Medan and plans to develop additional 600 MW CCGT for 2019-2030. Prices in $12+ MMBTU range are anticipated
  • PGN has already established a gas distribution network in Medan with capacity of at least 100 MMSCFD
  • New Industrial Complexes in Sei Mangke, Medan Star and Kuala Namu demand new gas for feedstock and power requirement, with the Kertas Kraft paper mill adding further gas demands. Price discussions have been in the US$9-$10/MMBTU range

 

Gas Suppliers

  • Due to depletion of natural gas supply, the Arun LNG plant has been revitalized as a Receiving Terminal
  • SLS and NSO production is expected to finish soon after 2018
  • Block A Medco has committed most of their production to PIM (Fertilizer)
  • Any in-situ gas available will need to be developed to provide supply
  • LNG import and re-gas will be the last resort to fill the demand gap

 

A comparison of expected availability in the Aceh and North Sumatra area to the National Demand is made in the table below.

Please note: Medco Block A is adjacent to Bow’s promising South Block A.

Although these figures are ‘market intelligence’ numbers, the potential shortfall is substantial, and thus fully in line with Arun’s role reversal from LNG export to LNG import and re-gasification.