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tate electricity company PT PLN has agreed on the price for natural gas from PT Nusantara Regas’ floating storage and regasification unit (FSRU), located in West Java, of US$14.43 per million British thermal units (mmbtu).

PLN’s oil-based fuels and gas division chief, Suryadi Mardjoeki, said the price took into account the value of the natural gas itself added to the costs for delivery and the regasification process, which is commonly called “alpha”.

“We set the alpha at $3.43 per mmbtu based on the results of an audit,” he told reporters on Thursday.

The natural gas price would be set at $11.1 per mmbtu, on the assumption that the Indonesia crude price (ICP) remained at $100 per barrel, he added.

He said other stakeholders, including the Oil and Gas Directorate General at the Energy and Mineral Resources Ministry and state oil and gas firm Pertamina, which will supply the natural gas, have also agreed on the price.

Suryadi said PLN would shortly sign the gas purchase agreement. “We hope to complete it by October 2013.”

Despite the absence of the purchase agreement, Nusantara Regas has been delivering natural gas from the FSRU to PLN’s power plant since May 24.

The FSRU takes deliveries of liquefied gas from tankers, then turns it back into gas (regasification) before pumping it to the power plant through an undersea pipeline.

The deputy director of the ReforMiner Institute, Komaidi Notonegoro, told The Jakarta Post that the price was rather expensive compared to natural gas in Indonesia’s domestic market, which ranged between $7 and $8 per mmbtu.

“There is no problem if the price of gas from the FSRU is a little more expensive than the average price. But it is too much when the price is twice the average domestic price,” Komaidi said.

As of July this year, Regas had delivered as much as 200 million standard cubic feet per day (mmscfd) of natural gas to PLN, some 165 mmscfd of which was delivered to PLN’s gas and coal fired power plant (PLTGU) in Muara Karang, North Jakarta. The rest went to another of PLN’s PTLGUs in Tanjung Priok, also in North Jakarta.

The government has been striving to improve the infrastructure for the distribution of natural
gas to anticipate rising domestic demand. Indonesia’s gas demand is projected to have increased from 3,500 mmscfd in 2009 to 4,700 mmscfd by 2015.

Nusantara Regas, a company jointly owned by Pertamina and state gas distributor PT Perusahaan Gas Negara (PGN), has been operating its FSRU since May. It takes deliveries of liquefied natural gas (LNG) from Pertamina’s Bontang plant in East Kalimantan.