Seven gas sales contracts signed

Alfian, The Jakarta Post, Jakarta | Sat, 11/27/2010 12:55 PM

Seven gas sales contracts worth US$1.88 billion were signed Friday, upstream oil and gas regulator BPMigas said.

The total gas volume covered within the seven contracts reached 269.9 trillion British thermal units (BTUs), BPMigas’ chairman R. Priyono said, adding that the gas utilization has been designated for the domestic market, including the power sector, manufacturers and fertilizer and petrochemical producers.

“The agreements are expected to support economic growth in the regions,” Priyono said. Included in the seven contracts was a gas sales agreement between PT Pertamina EP and PT Pertamina Gas, both subsidiaries of state oil and gas firm PT Pertamina.

Under the agreement Pertamina EP will supply 19.5 billion BTUs of gas per day (BBTUD) to Pertamina Gas’ LPG plant in Pondok Tengah, Bekasi, West Java. The contract will last four years starting from 2011. Pertamina EP will also supply 0.5 BBTUD of gas to PT Bumi Wiralodra, a company owned by the Indramayu regency administration. The agreement is for three years and will be effective starting next year.

Domestic oil and gas company Lapindo Brantas also signed two gas sales agreements Friday. The company will supply Sidoarjo regency administration companies Aneka Usaha and PT Petrogas Jatim Utama with two BBTUD of gas each.

The first contract will be effective next year for a period of 10 years, while the second contract is effective as of this year lasting for six years. Three other companies that secured gas agreements on Friday were Kodeco Energy CoM Ltd., Santos Sampang Pty., Ltd, and a consortium of Pearl Oil Sebuku, Total E&P Indonesie, and Inpex. Kodeco extended a contract to supply 6 BBTUD of gas to PT Petrokimia Gresik for three months starting November.

Santos signed a gas sales agreement with PT Indonesia Power, a subsidiary of state power firm PT PLN. Under the agreement, Santos will supply Indonesia Power with 30 BBTUD of gas for six years. The contract will be effective next year. The consortium of Pearl Oil Sebuku, Total E&P Indonesie and Inpex also signed a Head of Agreement (HoA) with fertilizer producer PT Pupuk Kaltim. In the HoA, the consortium will supply 80 BBTUD of gas to Pupuk Kaltim, effective 2012.

The contract will last for 10 years. Domestic gas demand has soared given increasing industrialization.

Although Indonesia’s net gas production is still higher than domestic demand, gas supply for industry remains in deficit because of the lack of transport facilities and receiving infrastructure.

State gas distributor PT PGN estimated that the gas deficit for industry would reach 385 BBTUD this year, and will continue to increase, reaching an estimated 713 BBTUD in 2015. PGN and Pertamina are preparing plans to build several LNG receiving terminals in anticipation of the deficit.