PLN to share its nature gas allotment: Minister

PLN to share its nature gas allotment: Minister

Zakki P. Hakim and Leony Aurora, The Jakarta Post, Jakarta

State power company PT Perusahaan Listrik Negara (PLN) has agreed
to allow some of its allotted amount of natural gas to be
redistributed to other large manufacturers, especially those
affected by the recent gas supply shortage in East Java, a
minister said.

"PLN and PGN (state gas distributor Perusahaan Gas Negara)
have agreed. I will speak further to them tomorrow (Tuesday) on
how much is to be redistributed," Minister of Industry Andung A.
Nitimihardja told reporters on Monday.

The minister suggested that PLN use petroleum-based fuels
instead and receive compensation from the gas redistribution
meant for large businesses. He did not mention anything about
costs that would burden PLN to change from natural gas- to oil
-fueled power plants.

Starting Aug. 1, PGN has limited its natural gas supply to
factories and plants in East Java to 85 percent of their
contracted amount as its supply from Lapindo Brantas and EMP
Kangean's fields are on the decline.

A number of industry players, particularly ceramic
manufacturers, fear that the new allottment for them will be
another setback to the ailing industry.

PGN's general manager for the East Java division, Trijono,
told The Jakarta Post that there was only enough natural gas to
supply 60 percent of the contracted demand of the large
businesses in the province with an average of 120 billion British
thermal unit (bbtu) per day.

However, as there has been about 25 million metric standard
cubic feet per day (mmscfd) of gas reallocated from fertilizer
firm Petrokimia Gresik, which is partly shut down this month as
it carries out some maintenance work, PGN has set the quota at 85
percent for August.

"We will calculate the allottment each month. If a company
exceeds its quota, we'll stop the gas flow," he said.

Supply from Kangean has continued to decline to 12 mmscfd at
present from 80 mmscfd stated in the contract while gas from
Lapindo Brantas had dropped to 48 mmscfd from 76 mmscfd at its
peak.

PGN has secured a short-term contract with Kodeco to get
another 30 mmscfd, but the gas producer had only been able to
provide 13 mmscfd, said Trijono.

"The natural gas shortage will go on until August 2006, when
supply from new contracts starts to flow," he added.

"I have not heard about PLN's decision to redistribute gas to
industry, but it certainly is good news," said Trijono.

PGN hopes that with additional supply for the factories from
PLN, the quota can be maintained at 85 percent, a level deemed
acceptable to ensure the survival of the gas-dependent sector.

Ministry data showed that gas accounted for almost a third of
ceramics manufacturers' total cost, while the national ceramics
industry needs an estimated 135 mmscfd of natural gas.

Separately, the country's fertilizer industry demand for
natural gas is about nine times more compared to what the
ceramics sector needs each day.