Pertamina hits snag in gas deliveries

Eric Watkins
Senior Correspondent

LOS ANGELES, Apr. 11 -- Indonesia's state-run PT Pertamina is having difficulty meeting contracts with local firms for the supply of natural gas although it plans to boost domestic gas deliveries when a new pipeline opens in July.

Pertamina has reported difficulty meeting a request by fertilizer plant Pupuk Kujang IA to continue supplying 30-34 MMcfd of gas until Apr. 30.

Pertamina spokesman Mochamad Harun said the state firm could not meet the demand without running the risk of defaulting on contractual obligations with other firms.

He said those firms include PT Krakatau Steel and state-owned gas transportation company PT Perusahaan Gas Negara (Persero) Tbk. (PGN), which carries Indonesian gas to Singapore (OGJ Online, Aug. 5, 2003).

Harun did not mention any effect on sales in Singapore but said Pertamina is facing a gas shortage of 48 MMcfd against demand in West Java. He said demand from Pupuk Kujang IA would increase that shortage to 82 MMcfd.

Pertamina and partners produce 1.1 bscfd of gas for the local market, about half of it going to customers in western Java. The state firm said it plans to increase supplies there in July on completion of the first phase of the projected South Sumatra-West Java Gas Pipeline.

Under that phase, the line is projected to deliver 250 MMcfd of gas over 20 years from Pertamina's Pagardewa gas fields in South Sumatra to Serpong in West Java for use mostly by small and medium enterprises.

Last October, PGN awarded Nippon Steel Corp. a contract valued at ¥17 billion for the construction of a 105-km, 80-cm subsea pipeline connecting Sumatra and Java, and a ¥20 billion contract to JFE Engineering Corp. for a 270-km land trunk section of the line on Sumatra.

Under project's second phase, PGN intends to meet gas demand for PLN power plants at Muara Karang, Tanjung Priok, and Muara Tawar.

That project comprises three sections of pipeline: Grissik-Pagardewa (185 km onshore; 36-in.); Labuhan Maringgai-Muara Tawar-Muara Karang Transmission (18 km offshore, 32-in.); and Pagardewa�Labuhan Maringgai Looping (270 km onshore; 32-in.).

In August 2004, ConocoPhillips (Grissik) Ltd., operator of Suban gas field on the Corridor Block PSC in South Sumatra, concluded a gas sales agreement with PGN intended to lead to second-phase expansion of the field's production and processing facilities, as well as new delivery pipelines (OGJ Online, Aug. 11, 2004).

Contact Eric Watkins at hippalus@yahoo.com.

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