BP, PGN warn of gas supply shortage in Java
Thursday, May 31 2001 - 06:00 AM WIB
Anglo-American energy giant BP and state gas company PGN warned on Tuesday that Java could face gas supply shortage in five years, which could hamper the government's efforts to provide cheap power, unless the government immediately take measures to boost gas production.
BP Indonesia's vice president of marketing Jimmy Straughan predicted that after 2004, Central and East Java's gas demand would increase significantly to some 800 million cubic feet per day (MMCFD) from the current demand of 400 MMCFD, while the existing gas producers' production capacity would start to decline in 2003 due to resource depletion.
Currently, BP, South Korean firm Kodeco and local firm Lapindo Brantas supply gas to the provinces.
He said that without new gas development, gas shortage in East and Central Java could reach 750 MMCFD in 2006.
He said after the coal-fired Paiton I and II power plants in Probolinggo, East Java come to full operation in 2005, the government has to rely on the gas-fired combined cycle power plants in Gresik, Grati and Tambak Lorok to meet the increase in power demand in the provinces.
The Gresik, Grati and Tambak Lorok power plants are owned by PT Indonesia Power, a subsidiary of state electricity company PT PLN, while Paiton I is partly owned by American energy firm Mission Energy and Paiton II partly owned by German firm Siemens.
Combined cycle power plants use gas or diesel oil as fuel.
Straughan noted that Indonesia Power would need more gas or should buy diesel oil to increase power output at the Grati, Tambak Lorok and Gresik power plants
"This is a serious problems, and unless necessary steps are taken, government would be forced to fill the gap with costly imported diesel oil," he said in a seminar on gas.
Earlier, state oil and gas company Pertamina said that gas reserve in East and Central Java would be enough to meet the increasing demand in East and Central Java.
Straughan said the business of supplying gas to users was complicated and could take years to complete.
"Usually, it takes 3 to 4 years to get a gas project online," he said.
He said five new gas projects should come on stream in 2006 to fill the projected 750 MMCFD gas shortage. Otherwise, Indonesia Power has to buy diesel oil for its power pants.
He predicted if no additional gas projects come on stream by 2006, Indonesia Power has to buy some five million kiloliters of diesel oil worth US$245 million per year.
Today, Pertamina still imports diesel oil due to the inability of its refineries to meet all the country's demand.
"The big question now is, in this current situation, how can we make sure the gas is there when we need it?" he said
PGN also voiced a similar concern about gas supplies in West Java.
"In the coming four years, we would see a gas shortage of 400 MMCFD," company president Qoyum Tjandranegara said in the seminar.
Qoyum said the shortage was due to reserve decline of existing producers and increase in demand.
"That is why the construction of the 650 kilometers gas pipeline from South Sumatra to West Java that would supply up to 500 MMCFD is very important," said Qoyum.
PGN's plan to develop the pipeline had been hampered by financing problems. (Alex)