LNG ‘Milk Run’ to Help Engie Expand Power Generation in Asia

  • Engie developing project for small-scale LNG in Indonesia
  • Company expanding service business in move away from coal

The world’s biggest independent power producer is taking its cue from the neighborhood milk man as it expands in Asia.

French energy giant Engie SA is developing a project for Indonesia using small gas-fired power plants on different islands throughout the archipelago country, Jan Flachet, the company’s Asia-Pacific President, said in an interview in Singapore. Small liquefied natural tankers would feed the plants from a central supply hub, similar to how milkmen would fill glass bottles at a processing plant and deliver them to homes.

“We call it the milk run, like in past times when you had the delivery of milk to your doorstep,” Flachet said. “You build a power plant of, let’s say, 100 megawatts, then build a small regas facility and feed it with small LNG tankers.”

Engie has issued some bids for the project that are due back in August and would work with Indonesian energy firms like PT Pertamina and PT Perusahaan Gas Negara on gas supply, Flachet said. The company, formerly known as GDF Suez, is also developing renewable energy projects as it tries to supply emerging Asian economies without relying on new coal plants. Flachet said he expects Engie’s projects in Asia to be split 50-50 between gas and renewables going forward.

Engie Lab

Spot LNG has tumbled 32 percent in the past year amid a crash in oil prices and as new production facilities come online faster than demand can grow. Prices rose 0.7 percent Monday to $4.909 per million British thermal units, according to a Singapore Exchange Ltd. assessment. Engie will still look to sign long-term purchase agreements for LNG as long as it can underpin them with electricity sales to minimize the price risk, Flachet said.

Engie is also expanding its service business, working with cities and companies to improve energy efficiency and build networks to collect more data. The services business has smaller margins than energy generation but there is growth potential that Engie is well-positioned to meet, Flachet said.

Engie opened a green energy research and development center in Singapore on Monday, Engie Lab Singapore, which will focus on energy systems for islands and cities, industrial energy efficiency and gas technologies.

The company also announced plans to operate an “internet of things” network covering the entire island of Singapore that will be connected to devices and appliances and collect data on use for a variety of purposes.

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