PLN rejects full absorption term in gas swap deal with Premier

By Godang Sitompul

State utility PT PLN has finally stated that it cannot absorb the whole volume of gas from Gajah Baru field under a swap deal with Premier Oil, the operator of the gas field in Natuna, saying that it sticks to its previous demand that part of the gas volume be transferred to PT Krakatau Steel.

"Due to the pipeline capacity, then the swap gas is given to Krakatau Steel first,? Oil and Gas Director General Evita H. Legowo told Petromindo.com in Jakarta on Thursday.

Evita did not give any further details on the gas swap deal.

But PLN Fuel Oil and Gas Division Head M. Suryadi Mardjoeki said that PLN would only use the gas, at certain volume, during its peak load from 09.00 in the morning until 21.00 at night and that the gas balance should be channeled to Krakatau Steel.

?PLN operates its power plants under a merit order so the gas is only used during peak load. PLN has planned to build storages of gas or CNG so that the gas excess can be used during the peak load,? said Suryadi.

Previously, it was reported that PLN hoped Premier Oil BV, the operator of the Gajah Baru field in Natuna, Riau Islands province, would sign the gas swap deal in early February. The company therefore called on the oil and gas contractor to soon resolve pending issues over the swap deal.

Suryadi said generally Premier and PLN had agreed on the gas swap deal, however, Premier Oil further demanded that PLN had to pay for the whole allocation amount of the gas even if it could not absorb them all.

Suryadi said state gas distributor PT Perusahaan Gas Negara (PGN) was ready to transport the gas to PLN?s power plants in north Jakarta.

The Energy and Mineral Resources Minister Jero Wacik in late October had approved to swap gas from Gajah Baru field with gas from ConocoPhillips? Corridor Block.

Under the swap deal, 40 million cubic feet of gas from ConocoPhillips? Corridor Block, which was supposed to be sent to Singapore buyers, will be redirected to PLTG Muara Tawar, owned by PLN. It will be replaced by gas from Gajah Baru field.

PLN, ConocoPhillips and Premier Oil were supposed to have signed the gas swap deal at the end of last year. However, the signing was delayed due to some unresolved issues.

Editing by Benget Besalicto Tnb.