PLN closes deal with Petronas for Klorok power Plant

PLN closes deal with Petronas for Klorok power Plant

Fabiola Desy Unidjaja, The Jakarta Post, Jakarta

State-owned power firm PT PLN signed a deal with Malaysian
counterpart Petronas to deliver liquefied natural gas (LNG) to
the Klorok power plant in East Java.

The LNG usage is expected to trim some US$100 million from
annual expenses at the plant.

Under the US$147 million planned annual contract, the
Malaysian firm is slated to deliver LNG amounting to 145 million
cubic feet per day from the Kepodang gas field in the northeast
of Madura island.

"We concluded the negotiations last week and will sign the up-
to-12-year deal as soon as possible," PLN director of power
plants and primary energy Ali Herman Ibrahim told The Jakarta
Post on Sunday.

The signing of the contract, he added, would take place early
next month.

"We expect them to start the delivery two years after the
signing. Using LNG will save our operational cost for the power
plant compared to more expensive diesel fuel."

Time of delivery is one of the points of negotiation as
Petronas said they could deliver the LNG 30 within months after
the signing of the contract, but PLN asked the firm to deliver in
24 months after the signing.

The Klorok power plant is the power source for Semarang, the
capital of Central Java, and has been using diesel fuel for its
operation.

Petronas has acquired two new gas blocks in Indonesia since
last December, including the Production Sharing Contract (PSC)
for the northeast Madura offshore field.

The contract was acquired from BP Plc which has been operating
in the 500-square-kilometer offshore field since 1999.

"This is the first time that we are using LNG instead of
diesel fuel for the Klorok power plant. We hope there will be
more power plants using natural gas to cut down the costs," Ali
explained.

Petronas is a relatively new player in the oil and gas
industry in Indonesia, with its first branch office in Jakarta
opened in 2001. The company has owned some 40 percent of PT
Transportasi Gas Indonesia since 2002.

PLN has been trying to switch to LNG because its diesel fuel
dependence has burdened the company's finances.

They are hoping to develop an LNG receiving terminal in Banten
province that could cost about $300 million.

The planned terminal will receive LNG through pipelines from
Sumatra or by ship.