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.