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