Domestic firms to absorb Masela gas, but demand lower price
Tuesday, June 13 2017 - 01:11 AM WIB
Three companies planning to develop fertilizer and petrochemical manufacturing facilities in Maluku, and state-owned electricity firm PT PLN are ready to absorb gas from the planned Masela block development project in Maluku, but demand for lower price.
This was revealed by Minister of Industry Airlangga Hartarto on Monday following a meeting with Coordinating Minister for Maritime Affairs Luhut Pandjaitan and Deputy Minister of Energy and Mineral Resources Arcandra Tahar, discussing the allocation of gas from the Masela block project for domestic industries.
The three companies planning to develop gas-based manufacturing industries in Maluku are state-owned fertilizer firm PT Pupuk Indonesia, which plans to build a fertilizer plant, and private-owned PT Elsoro Multi Prima, and PT Sojitz Indonesia, which plan to develop petrochemical production facilities. Meanwhile, PLN plans to build a 300 MW combined-cycle power plant to supply electricity for the planned aforementioned manufacturing facilities.
The three manufacturing firms will require a total of 474 mmscfd of gas, comprising of 214 mmscfd for Pupuk Indonesia, 160 mmscfd for Elsoro, and 100 mmscfd for Sojitz.
Muhammad Khayam, a director at the Ministry of Indusry, said that PLN will need about 60 mmscfd of gas.
The manufacturing industries, however, are demanding for lower gas price for them to realize the planned investment in Maluku. Bisnis Indonesia quoted President Director of Pupuk Indonesia, Aas Asikin as saying that the ideal price of gas from the Masela block project is around $3 per mmbtu. This is lower than the initial government?s estimate of $5-6 per mmbtu.
Secretary General of the Indonesian Olefin and Plastics Industry Association (Inaplas), Fajar Budiyono, was quoted as saying that gas price above $5 per mmbtu is not attractive enough for investors in realizing their petrochemical projects in Maluku. He said that the maximum gas price level to make the projects commercially feasible is $3.5 per mbbtu.
Khayam said that the price of gas from the Masela block project will be later finalized once the definitive allocation of gas for domestic industries has been determined.
Meanwhile, Vice President for Corporate Services at Inpex Corp, Nico Muhyiddin was quoted by Bisnis Indonesia as saying that economic details of the Masela project will be made during the front end engineering design phase. (*)