LNG solutions for Indonesia’s power needs

What have been the company’s key projects in Indonesia for the oil and gas market in 2016 and the first semester of 2017?
In previous years, we were more active in the downstream, petrochemical and oleochemical industries, delivering machinery and components to these industries. In the past three years we have also moved into the upstream by providing solutions and equipment for the upstream industry such as compressors for refineries or oil and gas, wherever compression is required.

What is the attractiveness of Indonesia and its importance for Rieckermann?
Indonesia has always been a focus market for us. On the one hand, the sheer size of Indonesia makes it the biggest single market in Southeast Asia. The other thing is the potential that Indonesia has in various industries. They have already come a long way, but they still have to go a long way. This situation creates a very dynamic potential market in various industries for us. It has therefore been in the focus and Indonesia, within the Rieckermann organisation, is one of the four biggest organisations that we have.

What are the main challenges to overcome for Indonesia?
The biggest challenge for Indonesia is the improvement of infrastructure in terms of providing energy. This is something where Indonesia would have to spend a lot of energy to develop. Right now the situation in Jakarta is very simple. Much of the GDP is lost on the streets of Jakarta. I am coming from areas in which I can ask a salesman to visit at least three to four customers a day and on good days he can do five. In Jakarta, they can do two if they are lucky. With this situation, you lose a lot of efficiency and dynamism. That is one of the most important things that Indonesia has to develop.

How is the company dealing with the logistics considering these infrastructural challenges here?
For the machinery and huge equipment that we normally sell, logistics is not that big of an issue for us right now. Other services we provide to customers, such as after-sales service, bringing in our technicians to the right place or having the spare parts that we stock provided as fast as possible, could be a challenge. We try to solve these issues together with logistics partners here in Indonesia by operating so-called bonded warehouses, where parts are in a bonded area and will be made available out of the warehouse to our customers, usually within 24 hours. That is what we try to achieve but it is not always possible.

What are the opportunities for Rieckermann in the LNG sector here in Indonesia?
The LNG sector is one that we are new to. Previously, we focused more on the downstream applications and now we are moving upstream, introducing small and medium-scale LNG plants to the market. We see a tremendous potential here. First, there are many so-called marginal gas fields in the east of Indonesia where big exploitation is not economically feasible. We believe that, with these small-scale LNG plants, we can provide solutions to those well owners to bring their gas resources to the market. We are looking at small-scale liquefaction plants; the smallest feasible unit economically would be around 200 tonnes of LNG per day. This would be sufficient to run a 50-MW power plant. That is a market which we see will develop over the next few decades; we see these plants in places where a connection to the pipeline grid would be economically infeasible. The price of 1 kilometre of pipeline is about USD 1 million. Only if you as a user or producer are close to the main pipelines does it make sense. Other than that, you have to look into other means of transporting your gas resources to end users, which might be industrial or governmental end users. That is our solution: setting up a small-scale LNG plant to produce LNG and then using existing infrastructure, such as streets, to truck the LNG to customers, where there is a small regasification unit so that the customer can produce or have gas for their demand available without being connected to the pipeline grid.

How can Rieckermann contribute to reaching the government’s goals for the Energy Mix 2025 and also for the 35-GW programme?
We are just entering the market, and we know that this will not be a market with quick wins. We know that we can not just stand up and claim that we are ready to take orders. It is a market that we need to develop, and it is a market that needs to be developed within Indonesia. Right now, we have the big gas wells producing 7 million tonnes of gas annually connected with the pipelines. Pipelines are basically providing infrastructure in the already highly developed industrial areas.
During the Gas Summit, someone showed a satellite picture of the USA, and the entire USA was illuminated. Then he put the picture on Indonesia and you could only see the major areas illuminated with the rest of the islands dark. They said that their dream was to make the picture of Indonesia like the picture of the USA. That means that there are a lot of energy requirements in remote areas. We think that, with our solution of using small-scale liquefaction plants and regasification, we can provide some solutions to bring energy into underdeveloped areas that have no chance of being connected to a pipeline grid and where it also might be difficult to become connected to the electrical grid.
We see our solutions as the answer to this problem. That is why we think we are entering the market with the right solutions at the right time. Our technology partners for this, ADD Synergy and Silica, have already been quite successful in other areas in the world, such as South America, providing these solutions. For them, it is now the right time to enter the Indonesian market.

Where do you see the company in the next years?
We will strive to become one of the recognised partners in the oil and gas industry for these kinds of solutions.
As the solutions that we have now are relatively easy to install and easily designed, they are basically
skid-mounted. This means that we can provide them within a relatively short time to the market. We understand that time is pressing. The government’s plans to provide electrical energy to 96% of the country are on a very challenging time schedule, and this might also be an answer to some of the problems they might face in providing this within the given timeframe.
We see ourselves as a partner here with a growing recognition and reputation in this field. In terms of company growth, I think the structure that we have would not be geared for big growth within our company because a lot of expertise and a lot of technical knowledge and execution lies with our business partners.

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