Pertamina to import extra diesel oil
Moch. N. Kurniawan, The Jakarta Post, Denpasar
The state-owned oil and gas company Pertamina planned to import an additional 225 million liters of industrial diesel oil worth about Rp 1.4 trillion (about US$150 million) this year to supply industries in East Java, according to a senior official of the company.
Pertamina director for management production sharing Effendi Situmorang said on Friday that the extra diesel oil imports were needed because of a declining gas supply for industries in the province.
"Any additional fuel import would burden the state budget... It's a lot of money, but we have no choice. Otherwise gas consumers will suffer from a gas shortage," Effendi said.
The government provides subsidies for part of the fuel sold to industries.
East Java gas consumers include the state-owned electricity company PLN and other heavy industries.
The PLN East Java unit said earlier that it had been suffering from a gas shortage problem for the past year, forcing the company to use costlier diesel oil as a substitute to avoid operational disruptions.
PLN had initially projected the gas supply shortage to occur in 2004.
The gas shortage in East Java is due to the sharp decline in the gas production of BP Kangean, a unit of British American energy giant BP PLc. amid depletion of reserves.
BP Kangean holds the rights to supply some 600 million cubic feet of gas per day (mmscfd) to East Java province until 2010. Under this 1980 concession, other gas suppliers can only enter the market if demand in the province exceeds the 600 mmscfd level.
BP Kangean gas output stood at about 300 mmscfd in September, and was down to around 250 mmscfd in February of this year.
The government is now planning to revise the BP concession to allow other producers to enter East Java.
A BP official earlier confirmed that the company was talking with the government on how to revise the gas supply contract and expected to reach an initial understanding within the next few days.
Several gas firms have expressed readiness to supply gas to East Java. They include Pertamina, Kodeco, Mobil Ceput and Madura and Lapindo Brantas.
Effendi said that the firms could start producing by the middle of next year.
Effendi said that Pertamina would be forced to import a greater amount of diesel oil if the government did not immediately revise the contract with BP.