PGN, PowerGas blame each other over gas supply

State gas distribution firm PGN refutes allegation that the failure to deliver natural gas on time to Singapore was because its side is not ready.

?PowerGas had verbally asked for two-months delay because its customers are not yet ready to use the gas. PGN, on the other side is ready to deliver first gas to Singapore on August 24. PGN will ask for take or pay clause to be enforced if the delay occurs,? said PGN president WMP Simandjuntak when contacted on Thursday.

PGN will have to pay a penalty if it fails to deliver the gas three months after the target date, Simandjuntak said. Singapore, in turn, would be penalized for failure to begin taking the gas three months after the target date.

PowerGas was quoted by Bloomberg as saying that the pipeline was still not operating on the Indonesian side.

"Once the initial gas has arrived at the border, then commissioning of the Singapore pipeline segment can commence," PowerGas, which owns a 9-kilometer section of the pipeline in Singapore waters, told Bloomberg.

Indonesia is contracted to supply up to 350 MMCFD of gas to PowerGas for 20 years. Natural gas will be sourced from ConocoPhillips-operated Corridor Block in South and PetroChina-operated Jabung block in Jambi through 470-kilometers pipeline. Initial gas supply will be around 150 MMCFD. (godang)