PLN buys Tangguh?s LNG on spot market

By Febry Silaban

State owned electricity firm PT Perusahaan Listrik Negara (PLN) has purchased two cargoes of LNG from the Tangguh plant in West Papua on the spot market on Sept. 16, 2014, according a senior official of PLN.

"Because the GSA (Gas Sales Agreement) has not been signed, to cover the needs of the two power plants including in Tanjung Priok and Muara Karang (through West Java FSRU), we have to buy LNG from Tangguh on the spot market," Head of Fuel and Gas Division at PLN Suryadi Mardjoeki told Petromindo.com on Thursday, adding it was for the first time that the company purchased LNG from Tangguh on the spot market to meet the gas needs of its power plants.

According to him, spot price is much lower than contract price. This is because the amount available for purchasing on the spot market is limited and ?conditional?, he said.

"The spot price agreed upon was US$10.7/mmbtu CIF (cost, insurance, freight) in FSRU West Java, while the price which was published by the Ministry of Energy and Mineral Resources namely: (12% x REP + $1)/mmbtu. If the REP is $105/barrel, the LNG price CIF in FSRU will be $13.6/mmbtu," Suryadi explained.

REP or Realization of Export Petroleum is a sales figure which is always released by the directorate general of oil and gas from several points of export, he said.

This year, PLN expects to purchase a total of 12 cargoes from Tangguh, but Suryadi said the number is likely to be fall as the Arun regassification plant in Aceh, which will receive and regassify the LNG before sending it through pipeline to PLN?s power plant in Belawan, North Sumatra, is still under construction.

"The LNG from Tangguh will add to gas supplies for the Tanjung Priok and Muara Karang power plants. Both power plants need a total of 27 cargoes (this year), consisting of 22 cargoes from Bontang and 5 cargoes from Tangguh. They have received 21 cargoes so far this year and still need approximately 5 to 6 more cargoes," he said.

Editing by Johannes Simbolon