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tate-run gas distributor Perusahaan Gas Negara (PGN) is expecting to resume operations of the Lampung floating storage and regasification unit (FSRU), although discussions the with the main client, PLN, are still in a deadlock.

PGN president director Hendi Prio Santoso said discussions with PLN were continuing in order to settle the disagreements.

'€œWe are in a process that runs in line with our expectations. We are also being facilitated by the Finance Ministry so that every concern can be resolved,'€ Hendi said.

The Lampung FSRU started operation last year. The development of the FSRU was part of an attempt to boost gas facilities in the country so that more gas could be consumed domestically.

However, the FSRU operation was briefly interrupted earlier this year as PGN, which operates the facility, recorded zero demand from its buyers, partly because of the slowing economic growth. The Lampung FSRU should have received liquefied natural gas (LNG) cargo sent from the Tangguh plant in West Papua, regasified them and then delivered the gas to customers, including state-owned electricity firm PLN and a number of industries in Lampung and West Java.

Under this year government'€™s allocation plan, the facility will receive 14 shipments from the Tangguh plant. PGN has previously committed to taking five of them after securing commitments from its buyers. However, none of them are sealed-in contracts, leaving the shipments with uncommitted statuses.

'€œWe are monitoring closely the development of demand, which currently is getting better. This is a dry season in which the hydro resources needed to generate electricity are declining. We need to know the government'€™s plan on its economic packages that will support the economy and help jack up the demand,'€ PGN director Wahid Sutopo said.

He added that PGN expected to resume the FSRU operation before the end of year.

Currently, a majority of power plants in the country are fired by coal, which is the least expensive fuel option following the drop in its global prices.

There are a number of power plants using fuel oil '€” the price of which is also under pressure because of a global supply glut '€” and renewable energy sources, such as hydro. On the other hand, power plants generated by gas are seen as slightly expensive given current pressures on the commodity'€™s prices. Distribution and transportation of the gas from resource-rich areas, particularly in the eastern part of the country, to demand-rich areas in the western part, has been seen as a major component in determining gas prices.

PLN director for procurement and primary energy Amin Subekti said his company was still waiting for an agreement on prices.

'€œSince the beginning [of the FSRU operation], we haven'€™t reached any agreement on the price. There are several price components, namely the gas price itself, the re-gasification cost and toll fee. Those are business-to-business matters with PLN,'€ Amin said.

He added that PLN remained committed to using gas to generate power.

Indonesia is known for holding significant gas resources. However, most of the commodity is sent abroad as LNG because of low demand in the domestic market. The government has been calling on industry players to increase gas utilization so that the country will be able to reduce its dependency on oil-based fuel.