Malaysia's Coastal Contracts Bullish on Indonesia LNG Entry

Augst 30, 2016

Coastal Contracts Bhd, a Malaysian offshore support vessels (OSV) fabricator, is optimistic about its impending entry into Indonesia's liquefied natural gas (LNG) market following the expected conclusion of a purchase of 49 percent stake in locally incorporated PT Jaya Samudra Karunia Gas (JSK Gas) in the fourth quarter of 2016 (4Q 2016) for approximately $20.8 million.

The acquisition of JSK Gas is part of Coastal Contracts' diversification strategy in a low oil price environment which has negatively impacted the latter's core OSV fabrication and charter business.Coastal Contracts, which entered into a Memorandum of Understanding (MOU) July 30 with JSK Gas and various vendors to formalize the acquisition, expects to have joint control over JSK Gas’ operating subsidiaries and assets that are primarily focused on LNG regasification and storage services.

JSK Gas, through its 99 percent owned unit PT Benoa Gas Terminal (BGT), would be involved in the operations and transfer of a Floating LNG Regasification Unit (FRU) over a 5 year contract period. Under the deal, BGT would be involved in the production of regasified natural gas for PT Pelindo Energy Logistik (PEL), with the gas supplied to a state-owned gas-fired power plant in Bali, Indonesia.

In addition, JSK Gas, through BGT’s 99 percent owned subsidiary PT Jaya Transportasi LNG (JTL), has a 10 year charter contract with the same counterparty to build and operate a Floating LNG Storage Unit (FSU), with optional extension of another 13 years. The FSU would receive and store LNG before it is transferred to the FRU for regasification.

Source : Downstream