Pertamina, BP to supply gas to PLN's C. Java power plant

JAKARTA (JP): State oil and gas company Pertamina and its Anglo-American production sharing contractor BP Plc will supply natural gas to the Tambak Lorok power plant in Central Java, which is owned by state electricity company PT PLN, under a memorandum of understanding (MOU) signed on Thursday.

Sidick A. Nitikusuma, head of general affairs at Pertamina's production sharing management, said in a statement on Friday that the MOU was signed by Pertamina and PLN in East Java province's capital of Surabaya.

Under the MOU, the gas supply will begin in 2004 at a daily rate of 160 million British thermal units (MMBTU), but he did not specify the period of the contract.

Sidick explained that the natural gas will be supplied from the Kepodang field at the Muriah block -- which is jointly operated by Pertamina and BP and located in the border of Central Java and East Java -- 50 kilometers north of the Central Java town of Jepara.

A 250-kilometer subsea pipeline will begin to be built in 2002 or 2003 to transport gas from the Kepodang field to an onshore receiving terminal near the power plant, Sidick said, adding that it will cost about US$350 million.

"No less than 1,000 temporary workers will be employed during the project," Sidick said.

Sidick said the Tambak Lorok power plan now used diesel oil as fuel.

The use of gas at the power plant will enable the country to cut domestic consumption of diesel oil and curtail its imports. This will enable the country to save a large amount of foreign exchange earnings, Sidick said.

Pertamina still imports a large amount of diesel oil to cover shortfalls from its refineries.

"The use of gas (at the power plant) will also help boost the use of gas as a clean fuel domestically," Sidick said.

Despite the fact that Indonesia has abundant gas reserves and is the world's largest liquefied natural gas (LNG) exporter, the use of gas domestically is still low because people prefer to buy cheaper, subsidized oil-based fuel.

Aside from the planned gas supply to the Tambak Lorok power plant, BP now supplies gas from its Pagerungan field at the Kangean block in Sumenep regency, East Java to customers in Gresik, East Java.

Its customers include PLN, state gas distribution company PT PGN and state-owned petrochemical firm Petrokimia Gresik.

It supplies the East Java customers with 330 MMBTU of gas per day through a 70-kilometer underwater pipeline. (jsk)