Pertamina to import extra diesel oil
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.