The allocation of 40 million standard cubic feet of gas from the Gajah Baru field in the Natuna Sea for the Muara Bekasi plant remains a disputed matter. State electricity firm PLN stands to lose burning diesel fuel worth Rp5.5 billion each day for 18 months.
It was past sunset, and a meeting in the offices of the Deputy Energy and Mineral Resources Minister Rudi Rubiandini had failed to come up with solutions. Attending the discussions on July 2 with him were four people from the state-run power company (PLN): CEO Nur Pamudji, Strategic Procurement Director Bagiyo Riawan, Oil-Based Fuels and Gas Division chief, Suryadi Mardjuki, and Primary Energy Planning Senior Director, Chairani. Also present was Subanendro, head of the Marketing Division at state gas distribution company (PGN).
The full team from PLN had arrived to complain. They raised questions of a reported plan to distribute 40 million standard cubic feet per day (mmscfd) of gas from the Gajah Baru field, which is operated by Premier Oil West Natuna. That supply of gas, which was originally provided for PLN's gas and steam Muara Tawar power plant, has recently become a source of tension between PLN and PGN.
"Previously, they said they couldn't distribute to Muara Tawar because of technical issues with the pipe capacity and meters," said Suryadi Mardjuki at his office on Tuesday afternoon last week. Due to these reasons, an option was suggested to send the gas to state steelmaker Krakatau Steel in Cilegon. However, because the price was not right, this option is now also in danger of failing. "Suddenly, there was news that the gas is going to be provided to generators owned by Bekasi Power."
Suryadi referred to a letter from PT Bekasi Power sent to the Energy Minister on June 28. In that letter, the subsidiary of Kawasan Industri Jababeka requested an allocation of 20 million cubic feet of gas per day from Gajah Baru.
Bekasi Power, which manages 130 megawatt gas and steam powered generators, has obtained definite gas supply from the Offshore North West Java (ONWJ) pipe, of about 10 mmscfd far below its requirements. As a result, since 2009, only one of Bekasi Power's three generators has been operating at full capacity.
If its request was granted this time, Bekasi Power hoped it could strengthen its guarantee of electricity supply in the Bekasi-Karawang system, which is packed with industries. "To transport the gas, we have already coordinated with PGN, which is ready to transport the gas to Bekasi Power's location," the company wrote in the letter.
It was this notification of PGN's readiness to send gas to a private company which angered PLN. "If this is indeed true, it means that there is no problem with their pipes and transmission line meters, because the gas will flow via the same line. Why did they say that they couldn't do it for our Muara Tawar power plant?" remarked Suryadi.
Previously, the technical issues which had come up were problems with the pipe capacity. Other obstacles were related to PLN's gas needs for Muara Tawar which rise and fall according to the consumers power usage. It was this instability in demand which created difficulties for PGN. Also, because no pipeline connects the Muara Tawar power plant to the company's allocation in the Gajah Baru field, PLN relied on PGN's ability to deliver gas from the ConocoPhillips-operated Corridor block, via its South Sumatra-West Java (SSWJ) pipeline. In exchange, as outlined in a gas swap agreement approved by the Energy and Mineral Resources Minister Jero Wacik in October of last year, the Gajah Baru field would channel gas to ConocoPhillips' buyers in Singapore.
However, there was the matter of the limited capacity of the transmission line meter.
Suryadi today believes that these reasons were overstated. He said PGN's gas pipe capacity reaches 800 mmscfd and can be increased to 1,000 mmscfd. "If their problem is only one of meters, PLN is ready to buy bigger ones. "Just install them and later we'll figure out the cost. We've checked and the price is at most Rp40 billion," he said. The Deputy Energy Minister, who was appointed just last month, agreed with the proposal to buy meters.
For PLN, the Rp40 billion cost is smallcompared to the potential losses they face if the gas fails to flow to their generators. Because then, PLN will be forced to burn more diesel fuel which is more expensive at Muara Tawar. Whereas, according to the contract, the gas which they agreed to purchase at US$9.8 per mmbtu (British thermal unit) should be able to run their generators for 18 months. According to Suryadi's calculations, "We have the potential to experience losses reaching US$600,000 per day."
In the beginning, this supply of 40 million cubic feet of gas from the Gajah Baru field was aimed at meeting the needs of generators in Batam owned by a PLN consortium and Universal Batam Energy. However, because the infrastructure was not ready and would not be completed for another 14-18 months, the government planned to divert it to Singapore. As a replacement, gas from the field at Grissik, South Sumatra, owned by ConocoPhillips for their consumers in Singapore, could be diverted to West Java via the South Sumatra-West Java pipe network.
At the beginning of the discussions around August last year, PLN was ready to accept the exchange scheme. As a condition, it requested that the gas, which would be distributed to its Muara Tawar generators, only be supplied during peak industrial load hours: from 9am-5pm, Western Indonesia Time.
This request caused difficulties for ConocoPhillips, which could not turn its gas production on and off each day. There were also difficulties for PGN as the transporter, because the capacity and meters of the South Sumatra-West Java pipe to Muara Bekasi had already reached full capacity. On the other side, PLN emphatically refused to accept the scheme if their conditions were not met.
"On those grounds, it was PLN itself which rejected the gas swap," said a spokesperson for the Upstream Oil and Gas regulator (BP Migas), Gde Pradnyana. "That was conveyed at the meeting between PLN, the Director General of Electricity, the Director General of Petroleum and Natural Gas, and PGN, on April 23."
The regulator BP Migas then planned to give the gas allotment to Bekasi Power to meet the needs of their generators. "This company also supplies its electricity to PLN," remarked Gde Pradnyana. That is why he admits he is confused by PLN's attitude, which is now crying out and questioning the distribution. "This isn't the only time PLN has acted strangely like this."
Teguh Setiawan, the managing director of Bekasi Power, said that his company's interest in the Gajah Baru field was based on the assumption that Krakatau Steel will absorb the gas in the swap scheme. For example, if Krakatau Steel got 10 or 20 mmscfd of ConocoPhillips gas, then Bekasi Power hoped that the same volume of gas, which is usually sent by PGN to the steel works from the ONWJ pipe, can be sent to them. Fortunately, the industrial gas pipe from the ONWJ line to Krakatau Steel is located close to Bekasi Power.
According to Teguh, the letter which was sent by Bekasi Power to the Energy Minister at the end of last July was nothing more than a request for an assurance of gas supply. "We have already invested in building this generator, but there is no gas," he remarked. To build a 130 megawatt gas and steam powered electric generator, PT Jababeka Tbk Bekasi Power's parent company spent at least US$150 million .
Teguh confirmed that the company he manages has no intention of taking gas allotted to PLN, since the beginning of last year, his company has been cooperating with PLN to buy and sell electricity. All the power produced by Bekasi Power's gas and steam powered electric generators is purchased by PLN to feed into the 150 kilovolt Java-Bali power grid. Bekasi Power then repurchases 20 kilovolt electricity from PLN for it industrial needs at Jababeka 3. "We're already married to PLN. There's no way we would make things difficult for them," he remarked.
Teguh further said with that contract to buy and sell electricity, PLN has limited Bekasi Power's gas purchase price from PGN to being the same as PGN's average gas price, which is now in the range of US$6.70 per mmbtu. It is also this last factor which has made it impossible for Bekasi Power to purchase the Gajah Baru swap gas directly, which for Universal Batam Energy costs US$8.70 per mmbtu. If transport and other costs are added, the price of the Gajah Baru swap gas is estimated to reach US$11-12 per mmbtu.
Jobi Triananda Hasjim, a PGN company director, did not want to comment much on these issues. "We're just a transporter. The issue of where the gas is sent and to whom it is to be given is up to the government," he said.
The heat over this dispute does not look like it will cool down anytime soon.
By Y. Tomi Aryanto, Agoeng Wijaya
No. 47/12, July 17, 2012
Premier Oil oilrig at the Natuna Islands.