September 26, 2008
Indonesia’s PGN to supply gas to power firm
Indonesia's PT Perusahaan Gas Negara (PGN) signed on Thursday an agreement worth around $600 million to supply natural gas to a state-owned power plant in West Java, Reuters quoted a company official as saying.
The state gas firm will supply 30 million cubic feet per day of gas to the Cilegon power plant, owned by PT Perusahaan Listrik Negara (PLN) for 10 years beginning in 2009.
"This is a commitment from PGN to provide alternative energy to power plants in effort to support economic development," PGN's corporate secretary, Heri Yusup, said in statement.
The gas supply deal is worth 5.6 trillion rupiah ($597.3 million), Yusup said.
Indonesia is seeking alternative sources of energy such as natural gas and coal to meet rising demand for power and to reduce consumption of expensive crude oil as its reserves dwindle.
PLN has a monopoly over power supply in Indonesia and operates 24,000 megawatts of capacity, but most of its plants are old, so daily output is far below capacity. Some 30 percent of the plants use oil products such as diesel and fuel oil.
PLN's gas-fired Cilegon power plant has a capacity of 740 megawatts and has already secured gas supplies from China's offshore oil and gas producer CNOOC, set at 80 million cubic feet per day from 2006 for 12 years.
PGN already has contracts to supply around 230 million cubic feet per day of gas to PLN power plants in the capital, Jakarta, and surrounding area. The gas will be sourced from fields in South Sumatra.
Indonesian officials have said domestic electricity demand is growing at around 10 percent a year.