Pertamina reduces gas supply to PGN and other buyers

State-owned oil and gas company Pertamina will reduce gas supply of up to 42 million standard cubic feet per day to its main buyers including state owned gas distribution company PGN and state owned steel producer PT Krakatau Steel beginning this month

Dedi Sarodji, the head of Pertamina's gas division, said in Jakarta on Thursday that the decision to lower the gas supply was made to meet the government's request to resume its gas supply to the plant A of fertilizer producer PT Pupuk Kujang in West Java.

"We were requested to resume the gas supply beginning January 1. But Pupuk Kujang needed sometime to start up its plant A," he was quoted as saying. "Therefore, we hope our main buyers such as PGN and Krakatau will understand about the decision," he said.

The government decided recently to ask Pertamina and its partners PT Ordira Energy Persada to resume gas supply to Pupuk Kujang's plant A in a bid to cope with the shortage of the fertilizer supply in the country. Pertamina and its partners were asked to resume the gas supply until April. For the supply after April, the fertilizer producer is expected to find new suppliers.

Pupuk Kujang stopped the operation of its plant A recently because Pertamina was no longer able to meet its gas needs due to depletion of its gas reserves. Under the existing contract which ended in December, Pupuk Kujang should receive gas supply of about 60 MMSCFD to produce about 570 tons of urea and 330 tons of ammonia a year.

Pupuk Kujang has secured a contract to get supply from BP Indonesia to replace the gas provided by Pertamina beginning January, this year. But the gas supply from BP could be not made due to pipeline problem.

Pupuk Kujang operates two fertilizer plants, Kujang A and Kujang A in Cikampek, West Java. The newly built Kujang II, which will begin its commercial operation next year, has also signed a gas supply contract until 2009. (*)