Supply from Kepodang field remains in limbo

The future of the gas supply for state electricity utility PT PLN from the Kepodang field in Central Java remains unclear, since a price for the gas has not been approved by the Energy and Mineral Resources Ministry.

PLN president director Nur Pamudji reported that the process had been stalled for around three months with no progress at all even though PLN and other related parties — Petronas Carigali, operator of the Muriah block where the field is located, and PT Bakrie & Brothers, contractor of the pipeline connecting the field and the Tambak Lorok power plant — had completed all negotiations.

“PLN, Petronas and Bakrie & Brothers have agreed on how the gas will be channeled from the field to PLN’s power plant. Now we’re just waiting for approval on the price of the gas from the head of the well,” he told reporters on Tuesday.

Earlier, upstream oil and gas BPMigas spokesperson Gde Pradnyana said that the agency had proposed a revision of the plan of development (PoD) for the Kepodang field to the energy and mineral resources minister that included a suggestion to extend the concession for the Muriah block. The extension was necessary so that the price of the gas did not change.

Petronas Carigali has the right to operate the Muriah block until 2021.

Energy and Mineral Resources Deputy Minister Widjajono Partowidagdo had also promised that he would push his office to resolve the problems in the Kepodang field by early next year.

The development of the Kepodang field has been delayed several times. In 2008, PLN and Petronas had agreed on the 354,000 million standard cubic feet (mmscf) of gas supply, the delivery of which was to begin in the fourth quarter of 2011. The price was pegged at below US$5 per million British thermal units (mmbtu).

At that time, the development was agreed to use the upstream scheme in which Petronas, as the operator of the block, would build the pipeline connecting the field and Tambak Lorok on its own.

However, in 2009, the concession holder for the development of Kalimantan-Central Java (Kalija) pipeline network, Bakrie & Brothers, proposed that the 200-kilometer Kepodang-Tambak Lorok pipeline be included in the Kalija project. The proposal was approved by the ministry in late 2010.

The government argued that the downstream scheme, which involve another party building the pipeline, would bring more benefit to the country because if Petronas built the pipeline, the government would have to reimburse the cost under the “cost recovery” scheme. As a result, the delivery of the gas has been delayed from the scheduled 2011 to early 2014.

—JP/Rangga D. Fadillah