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Industries may face gas supply shortage
Alfian , The Jakarta Post , Jakarta | Fri, 09/26/2008 10:58 AM | Business
Indonesian industries could suffer a gas shortage of up to 200 billion British thermal units per day (BBtud) next year as state gas distributor PT PGN begins increasing supplies to state power firm PT PLN.
PGN president director Hendi Prio Santoso on Thursday said the company would not actually reduce its supply to the market, but would not be able to meet rising market demand while increasing supplies to PLN.
"PGN's traditional market, especially in West Java, will face a gas shortage of about 200 BBtud. We already have a memorandum of understanding with some of these industries, but we will not able to supply gas to them," Hendi said.
He was speaking at a hearing before the House of Representatives' Commission VII, which oversees energy and mineral resources affairs.
East Java and North Sumatra are also threatened with a severe gas shortage, he added.
Hendi said the predicted shortage would burden industries with extra costs by forcing them to turn to more expensive diesel fuel.
"Industries will need an additional Rp 8 trillion for every 100 million cubic meters of gas not supplied. But we will try our best to find an alternative gas supply for them," Hendi said.
PLN earlier said it would begin shifting from fossil fuels to gas next year at two of its largest power plants, Muara Tawar and Tanjung Priok, to reduce costs by more than Rp 5 trillion (US$531 million).
PLN plans to consume about 258,783 BBtu of gas in 2009, with consumption expected to rise by 25.39 percent to 324,485 BBtu once the conversion is under way.
PGN has signed a Rp 5.63 trillion ($600 million) contract to sell gas to PLN. It will supply 30 million standard cubic feet of gas per day (mmscfd) from fields in South Sumatra to PLN's Cilegon power plant for ten years starting 2009.
It has also signed contracts to supply 13.2 mmscfd to Batam power plant, 200 mmscfd to Muara Tawar power plant, and 30 mmscfd to Tanjung Priok power plantall run by PLN.
Hendi added PGN was scheduled to sign another deal in the works to supply 8 mmscfd to Talang Duku power plant. He said PLN had agreed to buy the gas at the industry price of US$5.50 per million British thermal units.
