Govt promises to solve supply shortage

Minister of State Enterprises Mustafa Abubakar has promised to help solve the acute gas supply shortage being suffered by state gas distributor PT Perusahaan Gas Negara (PGN).

“We will meet with PGN’s president director on Wednesday or Thursday to find the best solution in dealing with the gas supply shortage,” Mustafa said at his office on Friday in response to PGN’s plan to reduce its gas supply to ceramic producers by 20 percent.

Mustafa said that the government should be able to provide a solution to ensure the state gas distributor would be able to meet the gas needs of its customers especially labor intensive manufacturing industries.

“The cut in the supply to industries should be avoided in order to prevent layoffs,” he said.

PGN’s president director Hendi Prio Santoso said last week that the gas shortage was mainly because a big portion of existing domestic gas supply had been diverted to local power plants, but this also reflected wider problems with LNG exports.

He estimated the gas shortage had reached about 297 million standard cubic feet per day (MMSCFD).
Hendi said that PGN planned to import liquefied natural gas (LNG) from Qatar to cope with the supply shortage problem. But the import plan would not be able to immediately solve the problem because it would take years to implement it.

PGN with its partners plan to build two floating LNG terminals off Banten, West Java and off North Sumatra to store part of the LNG to be imported from Qatar.

The construction of the terminal facilities will take at least two years.

Mustafa said it would not be a problem if PGN decided to import gas to solve the supply problem.
“There is no problem with the import option,” the minister said.

Industry Minister M.S. Hidayat also said last week he hoped PGN would not cut the gas supply because the government had promised to divert the larger part of the gas supply from Chevron to PGN for manufacturing industry.

According to the Indonesian Ceramics Industry Association (Asaki), its members are only able to get between 20 and 40 percent of their total demand for gas supply which is up to about 1.88 billion standard cubic feet per day.

Ceramics is among the manufacturing industries that have been hard hit by the acute shortage of natural gas.

Gas is largely used by manufacturers of ceramics, float glass, textiles and chemical products such as rubber gloves as well as by manufacturers of steel-based products, base metal and cement.

Asaki and others have reported that one manufacturer after another has been forced to shut down because of gas shortages.

Indonesia’s gas consumption surged 11.5 percent in 2008, outstripping the rate of growth of gas production, which only reached only 2.7 percent.

Besides the manufacturing sector, gas shortages also hurt the power sector. State power firm PT PLN’s primary energy director Nur Pamudji previously said PLN was short of gas, up to as much as 235 million British thermal units per day (BTUD) in Jakarta, 150 million BTUD in Central Java, and 90 million BTUD in East Java.

Outside Java, the big shortage is in North Sumatra, where PLN needs another 150 million BTUD of gas.
PLN is working to convert its fuel-fired power plants to gas-fired power plants in a bid to cut the cost of the government fuel subsidy.