Minister issues new regulation on utilization of gas for power plants
Friday, February 3 2017 - 01:07 AM WIB
Minister of Energy and Mineral Resources Ignasius Jonan has issued new Ministerial Regulation No 11/2017 on the utilization of natural gas for power plants including the possibility for power plant producers to import LNG.
According to a copy of the regulation obtained by Petromindo.com, natural gas allocation for power plants can be directly made to state-owned electricity firm PT PLN or independent power producers (IPPs).
PLN and IPPs can also purchase natural gas from gas traders as long as the latter provide infrastructure facilities.
In developing gas-fired power plants, PLN and IPPs must ensure gas supply for the entire lifetime of the plant of around 20 years. In case the gas supply from upstream contractors is not sufficient to fulfill the 20-year lifetime of the plant, the power producers can seek other gas sources to fill the gap.
In utilizing natural gas at wellhead for power plant, the procurement of the plant can be made either via direct appointment or tender mechanism.
Procurement of gas-fired power plant via direct appointment can be made with certain conditions including gas price limit of 8 percent of Indonesia Crude Price (ICP) per MMBTU at plant gate; guarantee of gas supply for the agreed period; investment cost of the power plant depreciated for at least 20 years; and cost efficiency of power plant with specific fuel consumption equal to 0.25 liter of high speed diesel per kWh.
Procurement of gas-fired power plant at wellhead via general tender mechanism is made in case price of the natural gas is higher than 8 percent of ICP per MMBTU.
According to the regulation, PLN and IPPs can buy natural gas at a maximum price of 11.5 percent of ICP per MMBTU if the power plants are not located at the wellhead.
In the case price of natural gas exceeds the 11.5 percent limit, PLN and IPPs can utilize LNG, the price of which is based on the economic value of the gas fields and using a formula at agreed free on board (FoB) price.
In the case of domestic LNG price exceeds 11.5 percent of ICP per MMBTU (parity to oil free on board), PLN and IPPs can import the LNG as long as the price does not exceed the 11.5 percent limit at the buyers? regasification terminal (landed price).
In the case the price of imported LNG is higher than the 11.5 percent limit, PLN and IPPs can buy pipeline gas at price more than 11.5 percent of ICP per MMBTU (parity to oil free on board).
Editing by Reiner Simanjuntak