FY2019 Study on Business Opportunity of High-Quality Energy
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FY2019 Study on business opportunity of High-quality Energy Infrastructure to Overseas “Pursue possible implementation of Feasible Project Structure for LNG Distribution and Power Plants(LDPP) and Business feasibility study for creating new energy demand in Eastern Indonesia” Final Report February 2020 Mitsubishi Heavy Industries, Ltd. Shizuoka Gas Co., Ltd. Marubeni Corporation CONTENTS Page 1. PREFACE 1-1 1.1 Study Contents 1-1 1.2 Study Methodology and Study Team Formation 1-3 2. PROJECT PROFILE AND WORK METHODOLOGY 2-1 3. NEEDS, REGULATORY AND DEMAND ANALYSIS 3-1 3.1 Needs Analysis 3-1 3.1.1 Assessment on East Indonesia’s Electrification Ratio 3-1 3.1.2 Confirmation of Consistency with National and Regional Development Plan 3-2 3.2 Regulatory Analysis 3-6 3.2.1 Regulatory Analysis on Natural Gas Pricing 3-6 3.2.2 Regulatory Analysis on Multiple Business Scheme 3-7 3.2.3 Regulatory Analysis on the Required Permits for LDPP Project 3-9 3.3 Demand Analysis 3-22 4. SOCIAL/ECONOMIC ANALYSIS 4-1 4.1 Outline of Social/Economic Analysis 4-1 4.2 Assumptions of Social/Economic Analysis 4-1 4.3 Result of Social/Economic Analysis 4-2 4.3.1 Result of Social Cost Benefit Analysis 4-2 4.3.2 Sensitivity Analysis 4-2 4.4 Qualitative Social /Economic Benefits 4-3 4.4.1 Improved Trade Deficit 4-3 4.4.2 Cold Heat Utilization 4-3 4.4.3 Potential Contribution to Nearby Tourism Industry 4-4 4.4.4 Increased Energy Independence (National/Energy Security) 4-5 5. FINANCIAL FEASIBILITY ANALYSIS 5-1 5.1 Assumptions 5-2 5.2 Result of Cashflow Analysis 5-3 6. BUSINESS SCHEME OPTIONS 6-1 6.1 Midstream Infrastructure to serve “Segment B” 6-1 6.2 Hypothetical Business Scheme Options 6-6 6.2.1 Option 1: B-to-B 6-6 6.2.2 Option 2: PPP AP for Distribution 6-7 i 6.2.3 Option 3: PPP AP for Distribution and Satellite 6-8 6.3 Assessment on the Possible Contracting Agency under PPP AP 6-9 7. NEXT STEP SUGGESTION 7-1 8. HUB CONSTRUCTION PLAN 8-1 8.1 Study for the HUB location 8-1 8.2 Facility Design 8-2 8.2.1 HUB facility design 8-2 8.2.2 Setting for large-scale LNG vessels to be utilized as FSU 8-3 8.2.3 Study for FSU operation 8-5 8.2.4 Study for BOG handling method 8-6 8.2.5 Power supply equipment of HUB 8-9 8.2.6 Other HUB facilities 8-9 8.3 HUB Operation & Maintenance Policy and Organization Study 8-16 8.3.1 HUB Operation & Maintenance 8-16 8.3.2 Organization 8-16 9. STUDY ON NEW DEMAND CREATION 9-1 9.1 Study on Demand Firmness 9-1 9.1.1 Selection of Candidate Sites 9-1 9.1.2 Study on Natural Gas Demand 9-1 9.2 Study on LNG transportation method 9-10 9.2.1 Example of Japan 9-10 9.2.2 Study on North Sulawesi 9-11 9.3 Site Visits 9-17 9.3.1 Interview with the state governor of North Sulawesi 9-17 9.3.2 Other investigations 9-18 9.3.3 New industrial park project site in Bitung 9-18 9.3.4 Port Bitung 9-19 9.3.5 Port Manado 9-19 9.3.6 Resort hotel in Likupan 9-20 9.4 Further Advanced Energy Utilization with reference to Japanese examples 9-20 9.4.1 Example of Advanced Energy Utilization in Japan 9-21 9.4.2 Possibility of Advanced Energy Utilization in Indonesia 9-24 9.5 Contribution to development of Indonesia through the natural gas spread 9-25 ii 10. STUDY TO IMPROVE FINANCIAL FEASIBILITY OF SMALL SITES 10-1 10.1 Financial Feasibility of Small Scale Power Plant 10-3 10.2 Optimal Facility Installation and Operation for Investment Amount 10-9 10.2.1 Examination on Possible Amount of Investment 10-9 10.2.2 Small Power Plant Facility Installation 10-12 10.2.3 Operation of Small Power Plant 10-14 11. REPORTING SESSION FOR RELEVANT INDONESIAN STAKEHOLDERS 11-1 12. SOCIAL AND ENVIRONMENTAL EFFECTS INCL. CO2 REDUCTION 12-1 13. STUDY ON ADVANTAGE OF JAPANESE COMPANIES, BENEFITS TO JAPAN 13-1 14. CONCLUSION 14-1 Appendix Appendix 3-1 Related PPP Regulations Framework in Indonesia Appendix 8-1 Typical facility BLOCK FLOW DIAGRAM of HUB Appendix 8-2 Current overview of large-scale LNG carrier iii List of charts Figure 2.1 Candidate Locations of LDPP Project and Segmentation Figure 3.1 2018 Electrification Ratio in Eastern Indonesia Table 3.1 List of LDPP Project Targeted Sites and Status in RUPTL Figure 3.2 Overview of PSN and Priority Projects Figure 3.3 The Gas Price based on MEMR Regulation No. 11/2017 and MEMR Regulation Figure 3.4 Business Scheme Determination Framework Figure 3.5 Overview of Required Permits Figure 3.6 Overview of Regulatory Framework of the LDPP Project’s Related Permits Figure 3.7 Hierarchy of Marine Spatial Plan in Indonesia Figure 3.8 Utilization of Marine Spatial Planning and its Relation to Marine Location Permit Figure 3.9 Hierarchy of Spatial Planning in Indonesia Figure 3.10 Procedure of obtaining Location Permits by Business Entity for the Purpose Investment and Business Activities Figure 3.11 Types of Required Document Application to Obtain Environmental Permit Figure 3.12 Process and Period of AMDAL and Environmental Permit Issuance Figure 3.13 Initial Hypothesis of Demand Category Table 3.2 Gas Demand Projection for Each Gas-Sourced Power Plant based on RUPTL 2019 Table 4.1 Avoided Costs of Electricity Generation Table 4.2 Avoided Social Cost of Carbon Table 4.3 Result of Social Cost Benefit Analysis (Base Case) Table 4.4 Sensitivity Analysis (Economic NPV) Table 4.5 Sensitivity Analysis (Economic IRR) Figure 4.1 Cold Heat Utilization Figure 4.2 VGL Utilization Table 4.6 Supplier Country, Petroleum Gas (2017) Table 4.7 Supplier Country, Oil Import (2017) Table 5.1 Conditions of each Power Plant Figure 5.1 Service and Cash Flow of the Project Table 5.2 Assumptions of the cash flow analysis Figure 5.2 Assumed LNG demand by the Project Table 5.3 Assumptions of the cash flow analysis Figure 6.1 Midstream Infrastructure Figure 6.2 Benefit of Diesel to gas, Coal to gas conversion Figure 6.3 Segment A LNG terminal as filling station for Segment B iv Figure 6.4 Regasification Unit Generating Cold Heat for Ice Production and Cold Storage Figure 6.5 Modular PLTMG for demand risk mitigation Figure 6.6 LNG VGL to replace LPG Figure 6.7 B-to-B Business Scheme Figure 6.8 PPP AP for Distribution Figure 6.9 PPP AP for Distribution and Satellite Table 8.1 Existing FSU projects Figure 8.1 Large-scale LNG vessel to be utilized for FSU (model) Figure 8.2 Large-scale LNG vessel to be utilized for FSU (model) Table 8.2 Specifications on model vessel Figure 8.3 Mooring Plan of FSU/LNG carrier Figure 8.4 Example of mooring with FSU and LNG carries Figure 8.5 Loading arms on a jetty Figure 8.6 Example of quick release hook on a jetty Table 8.3 FSU crew Table 8.4 Marine house members Figure 9.1 Change of LNG sales in Japan for different purpose Figure 9.2 Representative products and facilities in Japan using natural gas Figure 9.3 Configuration of consumer CHP using internal combustion (gas engine) Figure 9.4 Image of total energy efficiency improvement with CHP Figure 9.5 Map of the northern part of North Sulawesi Table 9.1 Potential natural gas demand of general hospitals, shopping malls and hotels in Manado Table 9.2 Potential natural gas demand of hotels in Likupang Figure 9.6 Details of potential demand in Manado Figure 9.7 Details of potential demand in Likupang Figure 9.8 Canning process Table 9.3 Potential natural gas demand of the canning plants in Bitung Table 9.4 Details of potential demand in Bitung Fig 9.9 Details of potential demand in Bitung(distribution) Table 9.5 Natural gas potential demand of the three areas in North Sulawesi (Summary) Table 9.6 Possibility of upward fluctuation of natural gas demand (Summary) Fig,9.10 General flow of LNG production and supply in Japan Figure 9.11 LNG transportation scheme (image) Figure 9.12 Introduction of CHP (image) v Table 9.7 Assumption of the cases Table 9.8 LNG transportation cost to the three areas in North Sulawesi in each case Table 9.9 Number of leased container for each case Figure 9.13 Interview with the state governor of North Sulawesi Table 9.10 Schedule of field investigation in North Sulawesi Figure 9.14 New industrial park project site Figure 9.15 Port Bitung Figure 9.16 Port Manado Figure 9.17 PLN substation and adjacent solar generation system Figure 9.18 Concept of power interchange system in an apartment ‘T-grid system’ Figure 9.19 Concept of ‘power interchange’ Figure 9.20 VPP (image) Figure 9.21 Example of LNG cold heat utilization Table 10.1 – Small Scale Sites - PLN new power station development plan Figure 10.1 Map of Morotai, Location of SKPT Figure 10.2 Development plan of SKPT and power station location Figure 10.3 SKPT Morotai Zone Layout/Facility plan/Current status as of 2018 Figure 10.4 Power Station block Flow Diagram Figure 10.5 Power Station Foot Print concept Figure 10.6 The Voyage route from Kendari LNG HUB (Marked on Google Earth) Figure 10.7 LNG Distribution Route(Middle/Large scale Site Route, Small LNG Carrier) Figure 10.8 LNG Distribution Route(Small Scale Site route (1) Container Carrier or Self-propelled barge) Figure 10.9 LNG Distribution Route(Small Scale Site route (2) Container Carrier or Self-propelled barge) Figure 10.10 LNG Distribution Route(Small Scale Site route (3) Container Carrier or Self-propelled barge) Table 10.2 List of major Business items and assets Table 10.3 Typical work split by business body vi Abbreviation list AMDAL Analisa Mengenai Dampak Lingkungan (Environment Impact Assessment) Kementerian Agraria dan Tata Ruang/ Badan Pertanahan Nasional (Ministry ATR-BPN of Agrarian Affairs and Spatial Planning / National Land Agency) BOG Boil off gas BOR Boil off rate BTU British Thermal Unit BPP Biaya Penyediaan Pokok (Cost Electricity Supply)