Gas prices are still at issue

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Gas prices are still at issue

Friday, 12 February 2010 09:32

Infrastructure development is not as fast as the supply readiness

JAKARTA: The price of gas purchases for gas power plants (PLTG) is still reason disoal economics value.
Unfortunately, the readiness of this energy supply is not matched the speed of infrastructure development, both of the terminal and power plant regasifikasi.
Directorate General (DG) Oil and Gas Ministry of Energy and Mineral Resources (ESDM) recently requested amendment gas sale and purchase agreement (PJBG) Total Indonesie-Inpex Corporation for PLTG Senipah because the price is too low.

PJBG gas contractor involved with the buyers, a consortium of Regional Electricity Company and Energy Resources Kukar and PT Toba Sejahtera, owners of private power generation Senipah.

Deputy Executive Agency Operations Control Upstream Oil and Gas (BP Migas) said Budi Indianto for PLTG Senipah gas with a capacity of 2x40 MW, only U.S. $ 2 per million British thermal units (Btu).

"The total time cost of U.S. $ 2 per million Btu. Directorate General of Oil and Gas requested that the price review for being too cheap. The gas itself was already available, but untapped," he said in a hearing with Commission VII of the House yesterday.

Based on business, PJBG which was signed in May 2009, the agreed gas price was U.S. $ 3.5 per million Btu for the years 2011 to 2017 with the escalation of 3% per year. Furthermore, in 2018 until 2031 the price set at U.S. $ 4.5 per million Btu escalation 3% per year and 30% of the selling price of electricity to PT PLN.

Gas supply for IPPs reached 20 MMSCFD to be supplied for 20 years. However, until now the gas supply has not been utilized.

Besides Senipah gas, Budi added there are still some projects that are ready supplied gas, but it does not offset the consumer's readiness to absorb it.

Supply of gas from Premier Oil for power plants owned by PT Universal Batam Energy 20 MMSCFD of a planned start in 2011 so far to secure power purchase agreement (PPA) from the PLN Batam.

Unfinished

In addition, the supply of gas from 20 mmscfd Elnusa Bangkanai for PLTG Muara Teweh also not be started in 2012 as planned because of the power plant is expected to complete in 2014.

Head of BP Migas R. Priyono tells the contractor actually could supply gas for domestic needs. Only, he says, price and infrastructure continue to constrain domestic consumers.

"If the price and full infrastructure, for example, PLN will buy U.S. $ 9-US $ 10, domestic consumer problems will be over. Makassar Strait and Masela too big and we would prioritize to domestic," he said.

One of the gas field which will be encouraged to increase the supply of gas is Block A in Nanggroe Aceh Darussalam. Next week, the government will almost certainly give approval to extend a contract to Medco E & P Malaka.

Budi Indianto admitted BP Migas did have to get the information the government plans to provide an extension agreement by the end of this month.

Gas from Block A will flow as much as 110 MMSCFD of gas to Iskandar Muda Fertilizer Factory and 15 MMSCFD to PLN Aceh Timur. Gas supply sourced from Siwah Flow Field, Flow Rambong, and Julu Rayeu expected to begin in 2012.

On the other hand, BP Migas has set for the supply of gas from Lorok Pond PLTGU Lpangan orioles, Block Muriah controlled by Petronas. The gas should be supplied from 2012-2022 with a production of 116 MMSCFD for 5 years.