Cut in gas supply to Pupuk Kaltim was due to technical problem

Chairman of the Implementation Body of Oil and Gas Rachmat Sudibyo said in Jakarta on Thursday that the cut in natural gas supply to state owned fertilizer producer PT Pupuk Kalimantan Timur (PKT) was due to technical problem.

"The cut in the gas supply to PKT has nothing to do with prices," he said as reported by Kompas daily on Friday. "The gas supply reduction was resulted from a damage in the gas transmission network and it is now being repaired by Pertamina," he added.

Director General of Chemical, Agro and Forestry Industries Zaenal Arifin said that the cut in the gas supply to PKT was not as serious as reported by local newspapers. "The gas supply will be resumed again tomorrow," he said.

Like Rachmat, Zaenal also denied press reports that the cut in the gas supply was due to PKT?s refusal to buy the gas at market or commercial prices.

PKT said on Wednesday that it had shut down one of its five-urea fertilizer factories after state owned oil company Pertamina through its production sharing contractors cut down the gas supply to the fertilizer company.

PKT?s spokesman Teddy Nawardi said that Pertamina?s production sharing contractors had reduced the gas supply to180 million cubic feet from 220 million cubic feet since August 14, resulting in a significant decline in the company?s urea production.

According to unnamed sources, some of Pertamina?s production sharing contractors reduced the gas supply after PKT refused to buy the gas for one of its five fertilizer factories at commercial prices. They said that under existing sales and purchase contracts, PKT is allowed to buy gas at subsidized prices only for four of the company?s five urea factories. (*)