PLN signs preliminary agreement to buy flare gas

Public utility PT PLN has signed the Heads of Agreement to buy flare gas from Chinese firm PetroChina Co. and state owned oil and gas firm PT Pertamina to generate power at a mobile power plant.

Under the HoA signed on Friday, the 20-MW mobile power plant to be developed by PLN will get flare gas from the Mudi well of the Tuban block operated by the Joint Operating Body (JOB) of PetroChina and Pertamina.

The power plant will get the supply of between 5 and 7 million cubic feet of gas per day (MMCFD) from the well at the price of USD$1.10 per million British thermal unit (MMBTU).

Ali Herman Ibrahim, PLN?s generation and primary energy director, said the mobile power plant was projected to replace power supplies currently being produced by diesel power plants. The new power plant will thus enable PLN to cut its diesel oil consumption by between 31,000 and 55,000 kiloliters. This in turn will enable PLN to cut fuel costs by Rp 289 billion per year.

The signing ceremony was witnessed by Minister of Energy and Mineral Resources Purnomo Yusgiantoro and Coordinating Minister for the Economy Aburizal Bakrie.

The government has been pushing PLN and the industrial sectors to use gas instead of oil as part of efficiency measures amid the rising trend of global oil price. (godang/Dino)