I

ndustries in West Java, East Java and North Sumatra are suffering an acute shortage of gas due to the decline in demand from state gas distributor PT Perusahaan Gas Negara (PGN).

PGN president director Hendi Prio Santoso said in Jakarta on Thursday the gas shortage occurred because the larger portion of the gas supply had been diverted to local power plants.

“Some customers in the areas cut down gas consumption at the end of 2008 due to a decline in orders of their products because of the global financial crisis,” he said.

He estimated that the gas shortage reached about 297 million standard cubic feet per day (MMSCFD).

Hendi said that the gas supply shortage effecting industries could result in layoffs of at 342,000 workers because of the declining production .

“These figure are only industries in West Java” he said.

Thousands of workers employed by 164 factories in Serpong may lose their jobs if the gas supply from Pertamina’s Offshore Northwest Java block could not fulfill their gas needs.

Hendi said that the industries had asked for additional gas supply as most had begun to operate at full capacity in line with the recovery in the economy. “But, we face difficulties in meeting this demand because we have allocated gas to the power sector,” Hendi said during a hearing with the House of Representatives Commission VII overseeing energy and mining on Thursday.

So far, PGN could not provide the gas demand of 297 MMSCFD to the regions. Industries in West Java received 145 MMSCFD, East Java 90 MMSCFD and North Sumatra 62 MMSCFD.

In West Java, PGN cannot meet gas demand for 342 industrial companies, 181 companies in East Java and 124 companies in North Sumatra.

Hendi said the worst deficit occurred in West Java. “We have received strong protest from industries in the province,” Hendi said.

PGN expects to sell between 800 to 900 MMSCFD of gas this year, up from between 750 and 800 MMSCFD of gas estimated to be sold last year, the company’s corporate secretary Wahid Sutopo said.

Hendi said the PGN had increased its gas allocation to the power sector from 20 percent of its total gas sales in 2008 to 40 percent in 2009.

However, state power firm PT Perusahaan Listrik Negara (PLN) said the company’s power plants faced gas supply deficit. “We are still in deficit of about 1 million BBTU [billion British thermal units] of gas,” PLN’s president director Dahlan Iskan said.

PLN said earlier the company’s power plants in the areas suffered a gas shortage despite the increase in the supply from PGN.

To secure gas supply for PLN’s power plants, the government has appointed PGN and state oil and gas company PT Pertamina to build three LNG receiving terminals located in North Sumatra, West Java and East Java.