PGN delays natural gas supply to Singapore
PGN delays natural gas supply to Singapore
The Jakarta Post, Jakarta
Natural gas shipments from Indonesia to Singapore using the
newly inaugurated gas pipeline has been delayed until Aug. 24 due
to technical problems.
State gas firm PT Perusahaan Gas Negara (PGN) said the gas was
originally scheduled to reach Singapore's Sakra Island by Aug.
12.
"There is a technical problem that caused the delay. We want
to make sure the pipeline can operate for 20 years" PGN president
WMP Simanjuntak told reporters on Tuesday.
He added that PGN hoped to be able to resolve the problem soon
while stopped short of providing further details.
PGN is in charge of gas pipeline construction and gas
transmission in Indonesia.
President Megawati Soekarnoputri and Singapore Prime Minister
Goh Chok Tong inaugurated a 477-kilometer natural gas pipeline
linking the two nations at a ceremony on Panaran receiving
terminal in Batam island, Riau earlier this month.
The pipeline transmits natural gas from Grissik natural gas
field in South Sumatra to Sakra Island via Sakernan in Jambi and
Batam Island.
The project was a collaborative effort between PGN and
Singapore's PowerGas, and it took two and a half years to
complete the project.
Under a 20-year contract, the pipeline will transmit 150
million standard cubic feet per day (MMSCFD) of gas from fields
operated by ConocoPhillips and PetroChina in Sumatra to Singapore
buyers. Gradually, the supply will be increased to 350 MMSCFD.
Meanwhile, a source at Singapore's Senoko Power told Dow
Jones the company may benefit from more than a week delay in the
gas delivery.
The gas is slated to feed Senoko Power's 360-megawatt gas unit
that will be commissioned in the fourth quarter of next year.
However, until then, Senoko Power will face excess gas supply and
is planning to use the bulk of the new gas to run its existing
steam turbines.
The efficiency of the steam turbines will drop when the fuel
feedstock is switched to gas from fuel oil.
"I think it is a good thing for the buyer. It could be a
blessing in disguise," a Senoko Power company source was quoted
by Dow Jones on Tuesday. "It may not be good for the seller."
The gas supply contract contains take-or-pay and non-delivery
contractual terms in which the seller would have to compensate
the buyer in the event of non-delivery, and the buyer would pay a
penalty if it fails to offtake the minimum required volume each
month, the source said.
Singapore natural gas importer Gas Supply buys the gas from
Indonesia and then sells the gas on to Senoko Power.
A Gas Supply official said compensation for non-delivery isn't
an issue right now.
"Both parties will sit down and talk about this matter," the
official said. "We aren't talking about compensation."
The Gas Supply official said the 7-kilometer Singapore-section
of the pipeline that brings the gas from Batam to Singapore is
ready to go.
The gas transmission pipeline is also part of huge project the
Trans-ASEAN Gas Pipeline Project which plans to connect the
region with a giant gas pipeline.
Indonesia is currently the only country in the region which
produces natural gas.
The pipeline is planned to be extended to Malaysia's West
Coast in the near future.