PGN to Help Find Solutions for Gas Crisis in Medan, Indonesia

PGN to Help Find Solutions for Gas Crisis in Medan

PT Perusahaan Gas Negara Tbk was recently invited as one of the speakers at the public discussion, to find solutions to the threat of the gas crisis for the industry in North Sumatra organized by Tempo Group in Medan.

This discussion is part of a series of discussions about the direction and policies of the national gas industry development and on this occasion PGN represented by General Manager SBU Distribution III Mugiono.

The member of Dewan Energi Nasional (DEN) Rinaldy Dalimi, economist Faisal Basri, Chairman of Gas Users Association of North Sumatra and Johan Brien Upstream Senior Vice President Strategic Planning & Operations Evaluation Pertamina Djohardi Angga Kusuma were also attended in this discussion to express their comments.

Deputy Chairman of Kamar Dagang Indonesia (KADIN) of North Sumatra, Tohar Suhartono explained that industries in are facing a threat of a serious gas crisis. Therefore, KADIN hopes that the government and other stakeholders to provide solutions related to gas crisis in Medan.

On this occasion Mugiono reveals that began on March 1, 2013 the gas supply from one supplier PGN in Medan, Pertiwi Nusantara Resources, will be depleted. With the halt of supplies from Pertiwi, the total supply of PGN’s piped gas will drop from 12 mmscfd in the end of 2012 to 7 mmscfd. While the needs of approximately 20 thousand customers PGN in Medan reached 25 mmscfd.

“With PGN gas distribution lines along 600 km, at 7 mmscfd gas supply which we distribute in Medan at this time is extremely minimal. We can understand the situation faced by our customers,” said Mugiono.

The threat of the gas crisis in Medan in 2013 has been actually predicted several years ago. PGN built a Regatification Floating Storage Unit (FSRU) in Belawan with a capacity of 250 mmbtu in 2011, to anticipate the threat of the gas crisis in 2013.

The gas crisis that occurred in the Medan at present indicates that the management of natural gas in Indonesia requires better synergies between supply, infrastructure and markets. Due to the lack of synergized-policies between upstream, midstream and downstream, businesses in Medan at present are threatened to decrease the production and even shut down following a lack of gas supply.

“Surely we have enough gas resources to meet domestic needs, but the management is not right. Fact, the construction of the gas pipelines have intentionally blocked to allow gas exports,” said Dalimi.

Therefore, in order to gas crisis as happened in Medan does not occur in other regions, the synergy between the supply infrastructure and gas market in the country should be run simultaneously.

According to Johan Brien, the solution of gas supply provision in Medan through revitalization of the Arun LNG terminal must also be accompanied by an appropriate pricing strategy to maintain the competitiveness of domestic industry. If the industry had to pay more than the price of gas at present, the increasing of gas supply will not provide maximum value to the productivity and growth of the industry in Medan.

Johan said the central government has never had a bias towards employers and industry in North Sumatra. One example, when the construction of the FSRU Belawan already managed to generate business optimism in Medan, arbitrarily moved to Lampung.

“Now we have to deal with an increasingly limited supply of gas, while the solutions offered by the government of Arun remains unclear. When no additional gas supplies in the near future, a lot of industries are closed and do layoffs,” said Johan.

In the same occasion SVP Upstream Strategic Planing and Operations Evaluation Pertamina Djohardi Angga Kusuma, explained, starting in March 2013, Pertamina will start building a 375 km pipeline from Arun to Medan to deliver gas from the regasification Arun to North Sumatra.

“In July of this year we will increase the gas supply in Medan by adding 8-10 mmscfd of gas from Benggala satu field,” said Djohardi.

Gas is a strategic national asset. Therefore, to improve the competitiveness of the industry, the gas should not be used as a commodity, but as the energy to drive the domestic industry, according to economist Faisal Basri.

“Last year we paid energy subsidies of more than Rp 306 trillion. While contribution of oil and gas to the state budget only Rp 277 trillion. So the result of oil and gas exports that we do, is not enough for a subsidy. Means making gas as a commodity is very wrong,” said Faisal

“North Sumatra should be able to transform from agriculture to industry as an indicator of progress. But at present industries face a lot of problems. Even 54 percent of its workers work the informal sector, this is sad,” said Faisal.

LNG World News Staff, February 27, 2013; Image: PGN