PGN seeks gas deal with Amerada
Leony Aurora, The Jakarta Post, Jakarta
State gas distributor PT Perusahaan Gas Negara (PGN) is in talks with Amerada Hess to purchase gas from the Ujung Pangkah block in East Java to supply small and medium enterprises (SMEs) in the province, a company official says.
PGN would buy about 100 million standard cubic feet per day (mmscfd), said the company's development director, Adil Abas Reksoatmodjo, on the sidelines of a gas sales agreement (GSA) signing ceremony between PGN and Santos on Tuesday.
"The difference (between the use of oil and gas) is about US$3," said Abas, explaining why there is significant gas demand from SMEs in East Java.
According to PGN, current gas demand in the province stands at some 250 mmscfd, which is expected to rise to 400 mmscfd in 2015.
Meanwhile, after two years of negotiations, PGN signed a GSA on Tuesday with Santos (Madura Offshore) Pty Ltd and PC (Madura) Ltd worth a total of some $800 million over 12 years.
Santos (Madura Offshore), a local unit of Australia's largest natural gas producer, Santos Ltd, will provide between 100 mmscfd and 110 mmscfd of gas from Maleo field in East Java starting in the third quarter of next year.
"The price from Santos is $2.415 (per million metric British thermal unit, or mmbtu)," PGN's president director, W.M.P. Simanjuntak, said.
"We have to pay another 17 US cents (per mmbtu) to Pertamina," he said, because PGN will use Pertamina's pipeline to transport the gas from the mouth of the field to prospective consumers.
"We will sell the gas at between $3.80 and $3.90 per mmbtu," said Simanjuntak.
He said the gas would help consumers save approximately $1.2 billion during the agreement period from the price difference between oil and gas.
Amid soaring global oil prices and a continued downward trend in oil output in the country, the government is promoting the utilization of other energy sources to replace heavily subsidized fuel.
Under a blueprint draw up by the Ministry of Energy and Mineral Resources, oil usage to produce energy, which at present stands at up to 55 percent, will be reduced to between 10 percent and 15 percent by 2020.
Gas usage to yield power is targeted to rise from 31 percent this year to 39 percent in 2020, and coal from 11 percent to 38 percent.
Earlier this month, PGN signed a memorandum of understanding with the Joint Operating Body Pertamina Amerada Hess, which operates the Jambi Merang field in South Sumatra.