"Once we have the right price, Pertamina will absorb everything."
Pipa gas
Katadata

Gas from Cepu Block's Jambaran Tiung Biru Field has remained unsold even though the project, which has entered the engineering, procurement and construction (EPC) phase, is targeted to start production in 2019.

Pertamina EP Cepu (PEPC) President Director Adriansyah said the gas processing facility has a capacity of 330 million cubic feet (mmscfd). But because the gas has 35 percent carbon dioxide (CO2) content, only 172 mmscfd has been sold. (Read:Pertamina Asks Government to Bear Tiung Biru Gas Price Difference)

The initial plan was that PEPC's parent company, Pertamina, and Pupuk Kujang Cikampek, would buy the gas. But Pupuk Kujang canceled its plan to buy 85 mmscfd because the price offered was too high.

Pupuk Kujang wanted a lower price of just US$ 7 per mmbtu. Meanwhile, Tiung Biru's benchmark upstream price is US$ 8 per mmbtu, plus two-percent per mmbtu, which corresponds to the field's Plan of Development (PoD).

Eventually, the output initially allocated to PKC will be taken by Pertamina. But up until now no sales and purchase agreement (SPA) has been signed because Pertamina is having trouble marketing the gas.

90 mmscfd of Pertamina's allocation was going to be sold to state power company PLN, and the remainder to Pertamina Gas (Pertagas). Despite the agreement (HoA), PLN still cannot afford to buy gas from Tiung Biru.

PLN said that a price of US$ 8 per mmbtu, plus a two-percent per mmbtu is too high. "This is what makes thing difficult for Pertamina. Right now the price is being recalculated," he told Katadata Monday (29/8). (Read:Gas Unsold, Widodo to Launch Tiung Biru Project Soon)

Pertamina President Director Dwi Soetjipto said the company must find other buyers if Pupuk Kujang Cikampek cannot buy the Tiung Biru gas. Otherwise, it will be difficult for Pertamina EP Cepu to start exploiting the resource.

Pertamina still has to calculate the purchase price for Pupuk Kujang Cikampek's quota. "Once we have the right price, Pertamina will absorb everything," he said in Jakarta, Monday (29/8).

Meanwhile, the Energy and Mineral Resources Ministry's Director General of Oil and Gas I.G.N. Wiratmaja Puja said Pupuk Kujang Cikampek had sent a letter notifying the ministry that it could not buy the Tiung Biru gas. But the government is still discussing the gas price. (Read: Government Offers 2 Options for Cepu's Tiung Biru Gas Purchase)

According to Wiratmaja, the field's gas CO2 content is too high. "So, we are still discussing how to optimise the gas, what costs can be trimmed," he said at the Ministry of Economic Affairs' building in Jakarta, Monday (29/8).