President Joko Widodo and Bangladesh PM Sheikh Hasina Wazed witnessed the signing of two MoUs between the two countries on gas project and foreign office consultation (Photo by: presidenri.go.id)

JAKARTA (TheInsiderStories) – Indonesia’s state-owned energy company PT Pertamina is embarking on a major gas infrastructure project in Bangladesh, marking the company’s entry into that country. The development of this integrated gas-based energy project will also support the drive of the Joko Widodo administration to strengthen relations with our South Asian counterpart.

On Sunday (28/01), the company signed a memorandum of understanding on the ‘Development of Integrated Gas Infrastructure and Independent Power Producer’  with Bangladesh Power Development Board. The project will consist of a Combined Cycle Gas Turbine (CCGT) Power Plant with installed capacity of 1400 MW and a Floating Storage and Regasification Unit (FSRU).

The MoU was signed in Dhaka by Ginanjar, VP for Power, New Renewable Energy of Pertamina and Chairman of BPDB Khaled Mahmood, and witnessed by Indonesian President Joko Widodo and Bangladesh Prime Minister Sheikh Hasina. The event took place on the sidelines of a state visit of President Joko Widodo to Bangladesh.

The power plant will be connected with the FSRU, mooring and off-loading infrastructure, as well as subsea and onshore gas pipeline, which will also be developed by Pertamina together with Petrobangla of Bangladesh.

The total investment required to develop the project is estimated at around US$2 billion, equal to Rp26.3 trillion. The construction of the integrated facility is projected to take three years from financial closing. Pertamina stated that construction is scheduled to start in 2019.

The cooperative agreement between Pertamina and BPDB was a follow-up to a memorandum of understanding between Indonesian Energy and Mineral Resources Minister Ignasius Jonan and Bangladesh State Minister for Power, Energy and Mineral Resources Nasrul Hamid on Sept 15, 2017 in Jakarta.

The MoU between the two governments’ energy ministers (G to G) serves as a foundation for cooperation between two state companies—Pertamina and Petrobangla of Bangladesh. Under the deal, Pertamina will develop the FSRU and supporting facilities as well as exporting LNG to Bangladesh.

The development of gas-based power plant was a move by Bangladesh government to narrow its gas deficit of around 1 million tons per annum (MTPA), likely to rise to 11 mtpa by 2030. The development of the gas-based power plant was also a move by their government to diversify its energy resources and switch to cleaner energy.

For Pertamina, the development of an integrated energy project in Bangladesh is a move to enter into gas infrastructure in the South East Asian and South Asian markets, which include Pakistan, India, Philippines and Myanmar, as well as East Asian nations such as South Korea, Taiwan and Japan.

Indonesia also plans to export LNG to Bangladesh, a decision which has sparked criticism from some observers, arguing that Indonesia itself was still short of LNG, in view of growing domestic demand.

Email: roffien@theinsiderstories.com