DOMESTIC NEEDS FOR GAS MUST GET PRIORITY

By Andi Abdussalam

Jakarta, Oct 23 (ANTARA) - The government, bearing in mind in increasing needs for gas at home, will give priority to meeting domestic demand rather than exports.              Indonesia's current gas production is estimated at only 8,412 million metric standard cubic feet per day (MMSCFD) while consumption at home continues to increase in line with the increasing needs of industries, power generators and others, such as the fuel-to-gas conversion program.             The fertilizer industry, for example, now needs some 800 MMSCFD and demand in the sector is expected to increase to 1,000 MMSCFD by 2015.              Last year, industries at home needed 3,799 MMSCFD, of which only about 60 percent was contributed by gas produced at home.              Other sectors needing gas supplies include power generators of state-owned electricity company PT PLN and government programs such as the kerosene-to-gas conversion program, where millions of families have to be supplied with subsidized gas.              Currently, the government has set aside 55.2 percent of its gas production for exports, while only 44.48 percent remains for domestic consumption.              Considering the urgent need for gas at home, Lawmaker Sohibul Iman urged the government to be serious in giving priority to domestic need. Moreover, it is planning to further develop more gas fields in the country, such as Train 3 of the Tangguh gas field in Papua.             Iman, deputy chairman of the Prosperous Justice Party Faction (FPKS) of the House of Representatives (DPR), said on Monday that domestic demand for gas continued to increase.              With regard to the increasing need at home, the government has planned to allocate most of its gas production, particularly gas produced by firms with new contracts, to domestic need.              "Natural gas produced henceforth will be devoted more for domestic needs rather than for exports," he said after a closed-door meeting with the House of Representatives' Commission VII members over the weekend.              The policy was taken in view of the increasing demand for natural gas in the country. The House of Representatives has also agreed with the policy.     "The government and the DPR shared the view that priority must be given to domestic needs," he added.              The minister, meanwhile, said that the government and the DPR would soon hold discussions on domestic allocation and sectors requiring the energy source.         He assured that the government would respect old contracts but would seek renegotiation for those considered to be hurting national interests.              With the government prioritising domestic need, it is expected that shortage of gas at home would be overcome.              The industry demand for gas has always fallen short of supply at home every year. Supplies are also inadequate for generators and fuel-to-gas conversion program.              According to Iman, the present condition required the government to be precise in prioritising gas distribution in the country.     "It must be accurate, clear and transparent,¿ Iman said, adding that the electricity subsidy had increased, forcing the government to propose a power tariff increase. Shortage of gas supplies to power generators forced state-owned power company PLN to use more expensive fuels.              "Provision of electricity is in the interest of the people and the government should prioritise the interest of the public," Iman said.              He added that the government should also pay attention to the complaints of industries which often ran short of gas supplies.              Gas production this year is estimated to fall 0.04 percent to 8,412 million cubic feet per day (MMSCFD) from last year's figures of 8,415 MMSCFD, according to Upstream Oil and Gas Regulator (BP Migas) chief, R Priyono.            Meanwhile, oil and gas production this year is estimated at the equivalent of 2.367 million barrels a day, down by 1.6 percent from last year's figures, which were recorded at 2.405 million barrels per day.              In order to increase production, the government is actively exploring and exploiting gas fields to increase gas production to 4,500 MMSCFD by 2020.              According to data from BP Migas, the upstream oil and gas regulator, the South Mahakam gas project in East Kalimantan, operated by Total E&P, has a projected capacity of 202 MMSCFD by 2013.              Other such projects are Madura BI in East Java, operated by Husky Madura, with a projected capacity of 100 MMSCFD by 2014, The Petronas-operated Kepodang gas project in Central Java with a projected capacity of 116 MMSCFD by 2015 and Senoro in Central Sulawesi, operated by Pertamina-Medco Tomoro JOB, with a projected capacity of 280 MMSCFD.              Projects to be completed by 2015 include Jangkrik in East Kalimantan, operated by ENI Muara Bakau, with a projected production capacity of 290 MMSCFD.     The IDD-Gendalo hub in East Kalimantan with Chevron Indonesia as its operator has a projected production capacity of 330 MMSCFD by 2016.              Inpex Masela will operate the Masela project in Maluku by 2017 with a production capacity of 355 MMSCFD, PT Berau Ltd. in Tangguh, Papua by 2018 with a production capacity of 870 MMSCFD and a Pertamina Consortium by 2020 in East Natuna, Riau Islands with a projected production capacity of 1,000 MMSCFD.              The East Natuna gas field produced 1,000 MMSCFD in 2010 and the figure could rise to 4,000 MMSCFD if the project reaches its production peak. However, it is still in the proposal phase.              The Energy and Mineral Resources Ministry (ESDM) is awaiting a proposal from the Finance Ministry on the development of the East Natuna gas block in Riau Island.              The Deputy Minister of Energy and Mineral Resources, Rudi Rubiandini, said that the Finance Ministry was still examining the proposal and is yet to call a meeting to discuss the same.              "There are many aspects that have to be covered. Perhaps that is why they need more time," Rubiandini noted.     The proposal has been issued through a consortium led by state oil and gas company, PT Pertamina, including representatives from ExxonMobil and Total SA.              The government will discuss the proposal thoroughly because the consortium has demanded a dedicated management system for the block on grounds that it had potentially vast reserves of gas.              Rubiandini informed that a specific management system is needed because for every single metric standard cubic feet of gas produced three metric standard cubic feet of carbon dioxide (CO2) has to be injected into the ground.              The Natuna block contains an estimated 222 trillion cubic feet of gas. However, it is likely that only 46 trillion cubic feet of gas would be produced, because 70 percent of its content is C02. ***2***   (T.A014/A/KR-BSR/A/A014) 23-10-2012 18:17: