PLN wants to buy gas directly from Conoco

By Godang Sitompul

State owned electricity firm PT Perusahaan Listrik Negara (PLN) has called on upstream authority BPMIGAS to allow it to buy gas directly from ConocoPhilips rather than through state owned gas distributor PT Perusahaan Gas Negara (PGN) in order to cut costs.

Now, PLN receives gas supplies for its Muara Tawar power plant in Bekasi, West Java from PGN which buys the gas from Conoco. The gas is produced by Conoco at its fields in southern Sumatra and channeled through PGN-owned South Sumatra West Java (SSWJ) pipeline.

Suryadi Mardjoeki, Head of Gas and Oil Fuel Division at PLN, said that after recent price increases, Conoco now sells its gas to PGN at the price of US$5.6 per mmbtu. PGN, in turn, sells the gas to PLN at the price of $10.2 per mmbtu.

?Should PLN be allowed to directly buy from Conoco, we would pay Conoco, say $5.8 per mmbtu, for the gas plus $1.47 per mmbtu in toll fee to PGN. In total, we shall only pay $7.3 per mmbtu,? he said.

It remains unclear if PLN has officially asked BPMIGAS to allow it to buy from Conoco. Experts also doubt the possibility of PLN directly buying from Conoco due to the fact that PGN now gets supplies from Conoco based on gas sale and purchasing agreement signed in August 2004.

Suryadi noted that as a consequence of the recent increases in gas prices, PLN?s spending for gas, which in the past stood at around $1.2 billion per year, will now increase by $600 million to around $1.8 billion per year. The firm?s power plants now consume around 800 bbtud of gas.

Editing by Johannes Simbolon