Indonesian Firms Sign LNG Deal

Indonesia’s Pertamina and state Perusahaan Gas Negara (PGN) have signed a heads of agreement on the supply of LNG carriers and LNG bunkering facilities. Under the deal, Pertamina will provide an LNG carrier and supporting facilities to PGN, while PGN will supply LNG and bunkering facilities to help convert Pertamina vessels to run on LNG (LNGI Aug.17'20). Five newbuild Pertamina vessels are part of the pilot project (LNGI Jul.20'20). Keeping Up With the IMO The International Maritime Organization (IMO) recently set its carbon intensity reduction target to 11% by 2026 as member states remain divided over how fast to cut emissions in the global shipping industry (LNGI Jun.18'21). Shipping players are increasingly eyeing cleaner-burning fuels like LNG as bunkering options. The IMO wants to halve global shipping's greenhouse gas emissions by 2050 from 2008 levels. The plan is to cut the industry’s carbon output by 40% by 2030 and 70% by 2050, from 2008 levels. In February, Royal Dutch Shell announced that it expects demand for LNG as a maritime fuel to reach 30 million tons by 2040. The number of LNG-fueled vessels worldwide is expected to more than double, while the total number of LNG bunkering supply vessels is set to reach 45 by 2023, the company said in its LNG outlook for 2021 (LNGI Feb.26'21). “PGN will supply LNG and LNG bunkering facilities in operating eco-green vessels ... in line with the implementation of the global IMO 2020 standard," said Nicke Widyawati, president director of Pertamina (LNGI Apr.21'21). A Problematic Past Indonesia has a problematic past in terms of supporting its own shipbuilding industry with cabotage legislation that threatened gas and oil production back in 2011 (LNGI Feb.15'11; LNGI Apr.15'11). However, much more recently, Indonesia has arguably improved its investment climate with the release of new incentives and contractual rules to attract investors to its upstream (LNGI Jun.17'21). Tom Pepper, London