PLN to buy flared gas

PLN to buy flared gas

PetroChina Co., the nation's largest oil producer, Indonesia's PT Medco Energy Internasional and the state-run PT Pertamina, plan to sell flared natural gas to state electricity company PT Perusahaan Listrik Negara (PLN).

The companies will sell as much as seven million cubic feet of gas from the Mudi field in East Java province, Kardaya Warnika, chairman of the Oil and Gas Upstream Regulatory Agency (BP Migas), said. The gas will be sold at US$1.1 per million British thermal unit, he said.

PLN wants to reduce its fuel import bill by lowering the use of oil-products in power plants by as much as 32 percent by 2007, President Director Eddie Widiono said.

It plans to boost the use of gas to 40 percent of its needs by 2007 from about 27 percent at present.

"Although the amount is quite small, PLN can save about Rp 7 billion a month by switching to gas from diesel," Kardaya told reporters on Friday.

PetroChina typically burns 4 million cubic feet of the gas a day.

The flared natural gas can fire a 30-megawatt power plant, Ali Herman Ibrahim, director for generating and primary energy, said. The utility plans to build a mobile, 20-megawatt plant in East Java, he said.

Beijing-based PetroChina operates the Tuban block in East Java with Pertamina, which holds a 50 percent stake. PetroChina and Medco each hold 25 percent of the venture.

PLN is planning buy flared gas from PetroChina's Salawati area in easternmost province of Papua, Ibrahim said. -- Bloomberg