Govt guarantees sufficient of supply of gas to fertilizer producers

The government has guaranteed that local fertilizer producers will receive sufficient supply of natural gas to ensure that the demand for fertilizer from the country?s farmers could be fulfilled, Minister of Industry and Trade Rini M.S. Soewandi has said.

The minister told Neraca daily that there would be no more shortage of gas supply after March, this year. According to the minister the shortage of gas supply currently being suffered by fertilizer producers had not yet affected the fertilizer supply to the farmers.

Rini said that the government was still calculating the actual demand of natural gas from the country?s fertilizer producers so that the allocation of the gas supply from the gas producers could be made according to their actual needs.

A number of fertilizer producers have suffered a shortage of gas supply due to the decline in the gas reserves while most of the existing gas production has been allocated for exports. The government has recently asked ExxonMobil Indonesia in Aceh to reallocate larger part of their gas to fertilizer producers PT Pupuk Iskandar Muda and PT ASEAN Aceh Fertilizer.

Besides fertilizer producers in Aceh, the largest urea producer PT Pupuk Kaltim (PKT) and PT Petrokimia Gresik have also suffered a cute shortage of gas supply. The gas supply for Pupuk Kaltim has declined to 196 million standard cubic per day (MMSCF) from 250 MMSCF per day previously.

President of PT Pupuk Kaltim, Omay. K. Wiraatmadja said that for food crops alone, Indonesia needed at least 4.5 million tons of fertilizer a year. "If there is a shortage of fertilizer production in the country, it will be difficult for us to import due to its large volume," he said.

Indonesia?s six fertilizer produce about 7.5 million tons of urea fertilizer a year. Pupuk Kaltim is projected to producer about 4.3 million tons this year, down from the normal level of 4.5 million tons.

According to the Oil and Gas Law, at least 25 percent of gas production of existing gas producers should be sold at home. Of the 25 percent allocation, seven percent go to fertilizer producers and the remainders are sold to state electricity company PLN. (*)