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Indonesia's Bontang LNG to shut one train for maintenance amid declining output

Highlights

Third terminal to be on standby

Bontang LNG projected to produce 77.74 LNG cargoes in 2021

Jakarta — Indonesia's Bontang LNG plans to shut down one of its two operational production trains over Jan. 15 to Feb. 5, following Eni's pipeline tie-in project to connect the Merakes gas field and Jangkrik floating processing unit (FPU), an industry source told S&P Global Platts Jan. 13.

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The source said that the Bontang LNG terminal will only operate one train during the maintenance period due to lower gas feed, cutting its LNG production by half. While one train will be shut, a third will be on standby.

The Bontang LNG plant is located in the East Kalimantan region of the Indonesian archipelago. It was designed with eight LNG production trains with a total capacity of 22.5 million mt/year but only two have been operational due to depleting gas feedstock.

A structural decline in Indonesia's LNG exports from Bontang have contributed to tighter supply in Asia and to the recent gas shortages in North Asia that led to record high spot LNG prices.

Separately, Indonesia's upstream regulator SKK Migas' operations deputy director Julius Wiratno told Platts that the tie-in project in the Merakes field will take about two weeks to complete, during which it will shut down the Jangkrik FPU.

SKK Migas' monetization and financials deputy director Arif Setiawan Handoko told Platts that during the tie-in project there will be no production from the Muara Bakau asset. However, he said that the temporary shutdown will not impact Indonesia's LNG sales as the tie-in project was pre-scheduled.

In 2021, the Bontang LNG plant is projected to produce a total of 77.74 cargoes of LNG, out of which 18.7 cargoes will be dedicated to the domestic market, and the remaining 59.04 cargoes will be allocated for exports.

The expected production figure is lower compared with Bontang's realized production throughout January-December 2020 from its two operated trains. They produced 84.9 cargoes in the full year 2020, comprising of 23.5 cargoes for domestic markets and 61.4 cargoes for exports, data from the regulator showed.

The Bontang LNG plants receive gas supply from Pertamina's Mahakam block and Eni's Muara Bakau acreage. The Mahakam block is expected to produce lower gas and condensate in 2021 at around 485 million cu ft/d, which is 20% lower compared with 2020's output of 605.5 million cu ft/d. The condensate is also projected to fall by 25% to 22,000 b/d from 29,400 b/d.