PLN moves to use more natural gas

PLN moves to use more natural gas

Leony Aurora
The Jakarta Post/Jakarta

State power firm PLN is ready to sign soon gas sales agreements
(GSA) worth millions of U.S. dollars with two producers to supply
three power plants in Kalimantan and East Java starting next
year, a company official says.

PLN will buy gas of between 120 million standard cubic feet
per day (mmscfd) and 150 mmscfd from EMP Kangean Ltd., a
subsidiary of the country's second-largest private oil and gas
company PT Energi Mega Persada, PLN's deputy of primary energy
Tonny Agus Mulyantono said recently.

"The gas will be used to increase the existing supply at the
Gresik plant and for the Grati plant starting 2007," said Tonny.

Both power plants are located in East Java.

The price agreed upon for the 15-year contract is US$3 per
million British thermal unit (mmBtu), said Tonny.

"We will sign the GSA after Lebaran," he added, referring to
the Muslim holiday that will fall on Nov. 3 and Nov. 4 this year.

The Gresik plant, which can use gas, high-speed diesel and
marine fuel oil, to generate power has a total installed capacity
of 2,260 megawatts (MW). The plant currently gets gas from Kideco
and EMP Kangean, but needs higher supply to convert more units
into using the cheaper fuel.

The Grati combined-cycle plant has a capacity of 750 MW and at
present burns oil-based fuel due to the unavailability of gas.

Next week, the state firm will sign another GSA with PT Semco,
a gas producer in East Kalimantan that operates fields under a
Technical Assistance Contract (TAC) with state oil and gas firm
PT Pertamina.

Semco will supply between 15 mmscfd and 20 mmscfd of natural
gas starting January next year for PLN's plant in Tanjung Batu in
the province, Tonny said.

The price applied for the plant, which has a total capacity of
180 MW comprising three units, will be between $2.8 per mmBtu and
$3 per mmBtu.

Soaring oil prices and the burden of the fuel subsidy on the
state budget have prompted the government to apply market prices
to industries and for power-generation purposes.

From October, PLN will have to pay more than double the prices
it used to for the oil-based fuel that it burns to generate
power.

PLN's director of primary power generation Ali Herman Ibrahim
said on Oct. 2 that due to the new policy, as well as more
expensive coal, the company's fuel costs in 2006 would jump by 50
percent to Rp 45 trillion (US$4.45 billion) from Rp 30 trillion
to be spent throughout this year.