Reuters: As Indonesia Gas Demand Falters, Floating LNG Plant Lies Idle

A $400 million floating plant for changing LNG back to gas has sat idle off Indonesia's coast for around six months despite only being commissioned last summer, hit by faltering demand for the cleaner fuel as oil prices drop and the economy slows.

The stoppage could stoke government worries over the strength of appetite for gas in Southeast Asia's largest economy, another blow to the administration of President Joko Widodo which has been pushing for greater consumption of the fuel to curb pollution and diversify energy sources.

Tepid Indonesian demand also means more liquefied natural gas is likely to spill into regional markets LNG-AS, already struggling near their lowest since before the Fukushima crisis in 2011 boosted usage as Japan shut all its nuclear reactors.

"Electricity demand is down significantly, so gas from LNG has become less competitive," said Chairani Rachmatullah, gas and fuel division chief at state-owned power firm Perusahaan Listrik Negara (PLN), which was supposed to be one of the main customers of the idle plant.

Floating storage and regasification units (FSRU) convert LNG shipped from producers back into gas, before transferring it onshore via a pipeline. They are typically cheaper and quicker to build than land-based LNG receiving terminals.  MORE