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tate gas distributor PT PGN called on the government to reallocate its gas supply — currently diverted to PT Chevron Pacific Indonesia — to allow it to help ease state electricity monopoly PT PLN’s gas supply problems.

PGN president director Hendi P. Santoso said delivering the diverted gas to PLN would help it improve efficiency and reduce the government’s electricity subsidy that is estimated to reach Rp 40.7 trillion (US$4.5 billion) this year.

“If the 100 million metric standard cubic feet [mmscfd] of gas goes to PLN, the firm may reduce the consumption of oil-based fuels by 727,000 kiloliters and the government may save Rp 5.5 trillion in subsidies this year,” he told House of Representatives Commission VII overseeing energy on Wednesday.

He added that the government would also receive additional revenues of about Rp 1 trillion from dividend payments and taxes.

Since February last year, the government diverted the 100 mmscfd gas allocation for PLN to Chevron in a bid to crank up oil production at Chevron’s Duri field in Riau.

Reallocating the gas supply to PLN would not pose a serious problem for Chevron because upstream oil and gas regulator BPMigas recently said it would provide another 85 mmscfd of gas from the Jambi Merang field to the oil company, Hendi said.

BPMigas spokesman Gde Pradnyana said the agency was in negotiations with Chevron to get back its gas, but the process was stalled because of fears Chevron’s oil production might slump.

A member of the House’s Commission VII, Dito Ganinduto, backed PGN’s request, saying that if PLN’s gas shortage problems remained, government subsidies for electricity could increase in the future.

As widely reported earlier, PLN claimed it needed 1,000 mmscfd of gas to fire its power plants throughout the nation. Major power plants such as Tanjung Priok and Muara Karang in North Jakarta, Muara Tawar in Bekasi, West Java, and Tambak Lorok in Central Java had faced difficulty acquiring gas supplies since their establishment.

To secure its gas supplies, PGN allocated $250 million to acquire several gas blocks in Sumatra this year. PGN currently has no upstream business and only distributes gas to power plants, industries and households.

The company has also prepared another $250 million for capital expenditures this year.

Currently, PGN operates more than 5,800 kilometers of transmission and distribution pipeline networks across the nation, accounting for 44.4 percent of the total pipeline networks operating in the country. As of the third quarter of 2010, it piped 1,674 mmscfd of gas.

The company’s market capitalization in January 2011 reached Rp 102.4 trillion, the fourth-largest among publicly listed state-owned companies. The government owns 57 percent of the company, while the remaining 43 percent is owned by the public.

— JP/ Rangga D. Fadillah