Govt asked to push Singapore to switch from pipe gas to LNG

To provide more gas for domestic consumers, the House of Representatives has suggested the government replace gas supply for Singapore from Sumatra with liquefied natural gas (LNG) from the Bontang plant in East Kalimantan or the Tangguh plant in Papua, The Jakarta Post reported on Wednesday.

United Development Party (PPP) legislator M. Romahurmuziy said in Jakarta on Wednesday that as Singapore already had LNG receiving terminals, it should not have a problem receiving LNG.

At present, Singapore receives gas supply from Jambi in Sumatra through a pipeline.

If Singapore agreed with the swap mechanism, gas currently allocated for the country could be supplied to the South Sumatra-West Java pipeline to meet the surging demand from industrial buyers in Java.

?With such mechanism, we hope that the problems of a gas shortfall faced by state electricity utility PT PLN and gas-using industries in the western part of Java can be overcome,? he told reporters Wednesday.

As widely reported earlier, PLN and natural gas-using industries had called for more gas supply. PLN claimed that more gas was essential to support the company?s efforts to boost operational efficiency by reducing oil-based energy consumption.

PLN claimed earlier that it needed 1,000 million standard cubic feet of gas per day (mmscfd) 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, the company said.

Romahurmuziy revealed that the gas shortage problems would force the government to increase the electricity subsidy this year due to excessive use of oil-based fuels amid soaring global oil prices. The government has allocated Rp 40.7 trillion (US$4.67 billion) for the electricity subsidy this year

If PLN could secure at least 100 mmscfd of additional gas supply, it may reduce the consumption of oil-based fuels by 727,000 kiloliters, allowing the government to save Rp 5.5 trillion in subsidies, the company said.

BPMigas spokesperson Gde Pradnyana said that his agency would consider recommendations from legislators, but he declined to comment on Romahurmuziy?s suggestion, adding that the decision was fully in the government?s hands and not within his agency?s authority.

?Currently the auction process [for excess LNG] is ongoing. We?re afraid if we make comments, the process may be disturbed. We?ll wait for the government?s decision,? he told The Jakarta Post in a telephone interview on Wednesday.

He said that 60 cargoes of LNG produced at the Bontang plant were available for sale.

Korea-based Kogas has won the bidding for 40 of the cargoes. The remaining 20 cargoes are still being auctioned.

The Japanese government had also requested Indonesia sell its additional LNG to help the nation cope with a power deficit following explosions at its nuclear power plants due to the earthquake and tsunami that hit the country on March 11.

BPMigas data shows natural gas allocation for domestic customers was 56.78 percent of production in 2011, or 4,366 mmscfd, out of a total production of 7,688 mmscfd.

Of the total production of 8,653 mmscfd last year, the government allocated 50.18 percent, or 4,342 mmscfd for the domestic market.(*)