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eputy Energy and Mineral Resources Minister Rudi Rubiandini announced that state power company PT Perusahaan Listrik Negara’s (PLN) gas allocation from the Gajah Baru field in the Natuna Sea would be given to state steel maker PT Krakatau Steel (KS).

He said PLN’s Muara Tawar power plant in Bekasi, West Java, could not absorb the 40 million standard cubic feet per day (mmscfd) allocation due to instability in demand at the power plant. He added that talks to shift the allocation to KS had been underway since a month ago.

“Now, we’re still finalizing the administration process. The price will be the same as what we have agreed for the Muara Tawar plant,” he told reporters at his office in Jakarta on Monday.

The price for the gas is set between US$8.70 and $8.80 per million British thermal unit (Btu).

Rudi said PLN would not be able to take back the gas that had been shifted to KS. However, he declined to disclose the exact date when KS would receive the gas.

PLN division head for oil-based fuels and gas Suryadi Mardjoeki said his company could not utilize the allocation because state gas distributor PT Perusahaan Gas Negara (PGN) could not deliver the gas as expected under a gas swap deal struck last October.

The power plant needed different amounts of gas depending on the time of day, he said. Between 9 a.m. and 9 p.m. the plant required 240 mmscfd, but outside those hours, it only consumed around 110 mmscfd, he added.

“PGN’s pipeline capacity is 560 mmscfd and in peak hours, it can be expanded to 625 mmscfd,” he explained, adding that PLN was not the pipeline’s exclusive user, but that gas for other buyers also passed through.

Because no pipeline connects the Muara Tawar power plant to the company’s allocation in the Gajah Baru field, PLN relied on PGN ability to deliver gas from the ConocoPhillips-operated Corridor block, via its South Sumatera–West Java (SSWJ) pipeline. In exchange, as outlined in a gas swap agreement approved by the Energy and Mineral Resources Minister Jero Wacik in October of last year, the Gajah Baru field would channel gas to ConocoPhillips’ buyers in Singapore.

However, the limited capacity of the transmission line meter at Muara Bekasi hamstrung PGN’s efforts to deliver reliable gas supplies to PLN’s plant in West Java.