PLN gets gas allocation from Tangguh for Medan

By Bernard Loebs

The government has decided to allocate about 100 BBTU (12 cargoes per year) of gas from BP Tangguh for the power plants of the state utility PT Perusahaan Listrik Negara (PLN) in Medan and surrounding areas.

Chairani Rachmatullah, PLN?s Senior Manager for Primary Energy Planning and Evaluation, told Petromindo.com in Jakarta on Monday that the Tangguh gas supply would be delivered through the planned floating storage and regasification unit (FSRU) in Belawan or the planned Arun receiving terminal. ?It will depend on a decision to be taken by the government,? she said.

She noted that currently, PLN in Medan had to use fuel oil, especially for peak load, because of its total gas need of 140 MMSCFD for Medan and surrounding areas, only about 20 MMSCFD that can be fulfilled. ?We?re now waiting for the government to approve the price of the liquefied natural gas (LNG). We want it to be set at the same price with that of Bontang LNG sold to PLN (through the West Java FSRU),? she added.

?Until now there are still gas sale and purchase agreements, signed between PLN and production sharing contractors which set prices below US$3 per MMBTU. But we see no reason for upstream authority BPMIGAS to raise the price, as the contractors are unable to fulfill their supply obligation at volumes stipulated in the contracts,? she said.

She took as an example, PHE in Pangkalan Brandan which could not at all supply gas at the total of 40 MMSCFD set in their contract due to its reserve being depleted. Also, TAC Semco and Pertamina in Tanjung Batu, Samarinda, which can only realize 8 MMSCFD from the total 20 MMSCFD. In such condition it is impossible for PLN to agree to a price escalation.

Chairani also feared the possibility that the state gas distributor PT PGN would raise its gas price to PLN. Based on the SPA signed between PLN and PGN, PGN has the right to increase the gas price without first asking for an approval from the government. ?We have therefore informally asked PGN not to raise its gas price now as the current prices to PLN are already averaging at US$6.4 per MMBTU, which is already higher than the average price of gas at domestic market at US$6 per MMBTU,? she said.

The gas contracts between PLN and PGN are for PLN?s power plants in Muara Tawar, Talang Duku, Tanjung Priok, and Cilegon.

Editing by Benget Besalicto Tnb.