PLN, VICO Indonesia to sign CBM purchase contract

State utility company PT PLN expects to sign gas sales purchase agreement (PJBG) with VICO Indonesia over the next few days.

?Our target is that coal-bed methan (CBM) will be available in December this year,? said M. Suryadi Mardjoeki, division head for fuel and gas of PLN.

PLN expects to purchase coal bed methane from VICO Indonesia's CBM project in East Kalimantan at a volume of 0.5 MMSCFD (2 megawatt) for up to five or six years.

CBM will be delivered to a power plant that will be built by PLN.

He said PLN expects CBM price to be set at a maximum of US$ 7 per MMBTU. However, VICO Indonesia wants the price to be higher than that level to cover costs for trial production.

?We demand that VICO can guarantee sustainability of CBM supply as the cost to build the power plant is expensive,? he said.

VICO Indonesia, the operator of Sanga Sanga CBM PSC onshore East Kalimantan, said earlier that it may start gas production later this year.

VICO Indonesia has been producing conventional gas from Sanga Sanga PSC for 40 years and is targeting to be the world?s first CBM-to-LNG producer.

VICO is jointly controlled by UK giant BP Plc and Italy?s Eni SpA.

Apart from CBM from VICO, PLN also expects to purchase CBM from ExxonMobil?s CBM project in South Kalimantan and Ephindo's Sangatta CBM project. (bernard)