H

undreds of industries in East Java are at risk of halting their productions in mid November due to the expected drop in gas supply from state gas company PT PGN.

The drop is expected due to the fact that PT Santos Indonesia, which meets 80 percent of PT PGN’s gas load, will halt its supply for 15 days starting on Nov. 15, because the Australian oil and gas subsidiary will carry out repairs at its Maleo mobile oil production unit in the Madura Strait.

According to East Java Energy and Mineral Resources Office head Dewi J. Putiatni, the 15-day stoppage will affect 183 industries in East Java due to the limited gas supply.

The stoppage will aggravate East Java’s gas availability, which has already suffered a deficit due to the rising growth of consumption.

Based on data at the Natural Gas Users Industrial Forum (FIPGB), 326 factories from 22 industrial sectors still face a gas deficit. The industries, in 16 provinces, include food and beverage, textiles, fertilizer and ceramic tiles.

Achmad Widjaya, FIPGB secretary and head of the ceramic industry association, said East Java was home to 12 ceramic companies that employed 3,000 workers on average. The stoppage, he said, would incur a loss of Rp 2.43 billion (US$277,020) per day.

Upstream oil and gas regulator overseeing East Java, Papua and Maluku (BP Migs Japalu) head Hadi Prasetyo said his office would seek a mechanism for PT Santos to stop producing gas in stages until the second week of December, rather than all at once.

“The repairs should be done in alternation, so maybe a day for repairs and the next two days resume producing gas, or vice versa, and so on until repairs are complete,” Hadi said over the weekend.

Hadi urged PT PGN customers to understand the situation.

Given the contractual basis in which PT PGN buys gas from PT Santos based on the latter’s ability to provide it, he said, PT PGN cannot complain about the condition.

According to Hadi, deprived customers may hold PT PGN’s responsible on the condition that the trading contract stipulated a compensation clause in the event of a drop in gas supply.

“They could file a class action suit, but they must be careful. What is the trade agreement like? Is there a supply security clause? It should exist and be arranged beforehand,” he said.

PT Santos Indonesia is a gas operator in East Java that supplies gas to PT PGN Strategic Business Unit II. It produces 80 percent of its total supply capacity of 130 million standard cubic feet per day (mmscfd), or between 100 and 110 mmscfd.

The rest is met by Pertamina Hulu Energi (PHE) West Madura Offshore (WMO), with 16 mmscfd (around 12 percent), PT Lapindo Brantas 2 mmscfd (1 percent) and Gresik Migas between 3 and 4 mmscfd (7 percent).

PT Santos’ planned stoppage has also raised concerns from the East Java Chamber of Commerce (Kadin) and The Indonesian Employers Association (Apindo) and the provincial administration.

Kadin’s organization and membership affairs deputy head Deddy Suhajadi expressed regret over the current condition, given the fact that the province remained in short supply of gas.

According to Kadin’s data, current gas supply to industries has been further clogged, as each industry faced a gas supply deficit of between 30 and 40 percent on average.

Apindo deputy secretary said in Jakarta that each industry in East Java was expected to spend as much as Rp 2 billion extra to reposition its gas supply during PT Santos’ repairs.

Those expected to suffer most from the stoppage are the food and beverage, ceramic tile and steel industries.

Jonathan Yusuf. managing director of PT Keramik Diamond Industries, said that they could not replace gas with another fuel such as diesel because it would increase production costs, while coal is bad for the environment.

Governor Soekarwo said the government was hoping to soon realize the establishment of a gas plant by Hong Kong-based Energy World Corporation to tackle the deficit problem.

“The company is going invest $500 million in the plant, which will store supply from Papua, Sulawesi, Australia and Sri Lanka for domestic consumption,” he said.