PLN to end contract for gas supply from Kepodang field, seeks alternative
Wednesday, August 30 2017 - 04:44 AM WIB
Petromindo
State-owned electricity firm PT PLN is looking at option to end its current gas supply contract with Petronas Carigali Muriah Ltd, operator of the Kepodang gas field in East Java, and will seek for alternative supply including from LNG for its PLTGU Tambak Lorok combined-cycle power plant in Semarang, Central Java.
Director for Strategic Procurement 2 at PLN, Supangkat Iwan Santoso said Tuesday that the planned move comes after the Ministry of Energy and Mineral Resources and upstream authority SKK Migas approved last month request by Petronas Carigali to declare force majeure status for the Kepodang field in the Muriah block.
?It has been declared as force majeure. If so, the option is for termination (of the gas supply contract). Each are exempted (from their respective responsibilities). PLN is no longer obliged to buy (the Kepodang gas), while the supplier is also no longer obliged to make the supply,? he explained.
The Kepodang field, which started production in 2015, was supposed to supply gas via pipeline operated by PT Kalimantan Gas Jawa (KGJ) to the 800 MW PLTGU Tambak Lorok until 2026. But given the faster depletion rate in the gas reserves, due to overestimation of the field?s reservoir, the supply contract may have to be stopped in 2018. The field currently supplies only around 70 mmscfd of gas to the power plant, much lower than the contractual volume of 116 mmscfd. Petronas requested for a force majeure status in July of this year.
Supangkat said aside from Kepodang field, the PLTGU Tambak Lorok also receives gas supply from the Central Processing Plant (CPP) area Gundih Asset 4 of PT Pertamina EP at a volume of 50 mmscfd.
?Previously, gas supply comes from Kepodang and Gundih. Now, it?s only Gundih under a 12-year contract. PLN we?ll now look for replacement (of Kepodang gas), it could be from LNG,? Supangkat said.
He acknowledged that Petronas has offered a replacement, but PLN is still evaluating the offer as the price was considered too expensive. ?There has been a replacement offer. But PLN is still evaluating it because the price is expensive. The escalation (factor) is too high, reaching 80 percent,? he said.
Editing by Reiner Simanjuntak