T

he government has brought its plan to boost the utilization of natural gas in the transportation sector a step closer to reality after the signing of memorandum of understanding (MoU) between gas producers and regional administrations in Jakarta on Monday.

Under the agreement, a total of 35.5 million standard cubic feet per day (mmscfd) of gas will be supplied to Greater Jakarta (Jakarta, Bekasi, Bogor, Depok and Tangerang); Surabaya, Gresik and Sidoarjo in East Java; and Palembang in South Sumatra.

For Greater Jakarta, the 23.1 mmscfd of gas will be delivered by PT Pertamina EP, Medco E&P Indonesia, PT Pertamina Hulu Energi North West Java Offshore (PHE ONWJ), PT Perusahaan Gas Negara (PGN) and Joint Operation Body Pertamina-Talisma Jambi Merang.

Three cities in East Java — Surabaya, Gresik and Sidoarjo — will obtain 10.2 mmscfd of gas from PHE West Madura Offshore (WMO), while Palembang will receive 2.2 mmscfd of gas from Great Palembang Infrastructure Development (SP2J) and Pertamina EP.

Energy and Mineral Resources Minister Jero Wacik said the MoU signing would pave the way for faster implementation of the conversion of oil-based fuels to gas. Through the signing, he also expected the support of regional administrations.

“Many businessmen have complained that it’s difficult to get permits to build gas stations. We request all regents, mayors and governors to ease the permit-making process,” he told reporters at a press conference after the signing.

Currently there are six compressed natural gas (CNG) stations in Greater Jakarta and Surabaya and 11 fuel stations providing liquefied gas for vehicles (LGV). Four more CNG stations are now under construction in Palembang.

The government has issued an assignment letter to Pertamina to build 54 CNG stations and 108 LGV stations in Java and Bali in 2012.

This year, the government plans to distribute 25,500 converter kits to government cars and public transportation vehicles to allow them to use gas-based fuels. This program is expected to cut the country’s subsidized fuel consumption by 0.3 million kiloliters, worth Rp 1.5 trillion (US$163.46 million).

However, Jero revealed there was still a barrier in boosting the utilization of gas-based fuels — the price. The price of CNG is currently pegged at Rp 3,100 per liter, equal to Premium (subsidized fuel).

“The gap between the CNG and Premium prices is still close. Premium is only Rp 4,500 per liter. If our proposal to increase the price to Rp 6,000, I believe we can accelerate the conversion program,” he explained.

Medco E&P Indonesia president director Frila Berlini Yaman said under the MoU, her company would deliver 2 mmscfd of gas to Greater Jakarta starting in 2013 for a three-year contract period.

The Energy and Mineral Resources Ministry’s director general for oil and gas, Evita Herawati Legowo, said using gas would benefit both the government and the people. People would enjoy cheaper prices and more environmentally-friendly fuels, she continued.

“For the government, the use of more gas will certainly reduce the amount we must spend on subsidies for oil-based fuels,” Evita emphasized.