Jakarta. Indonesian state-owned energy company Pertamina signed a preliminary agreement on Tuesday (08/08) to supply state electricity utility Perusahaan Listrik Negara (PLN) with natural gas for the next 30 years.
"This is just the beginning," Deputy Energy and Mineral Resources Minister Arcandra Tahar told reporters, indicating that the deal would be formalized at a later date.
Under the heads of agreement, Pertamina agreed to sell 100 million cubic feet per day (mmcfd) of natural gas to PLN at a price of $7.60 per million British thermal units. Pertamina also plans to sell 72 mmcfd of gas from the field to local industry, Arcandra said.
Of that amount, $6.70 is for the gas itself and 90 cents is a toll fee for a gas pipeline.
The gas will be supplied from the Jambaran-Tiung Biru field in East Java, which has not started producing yet.
Output from the Jambaran wellhead is expected to reach 330 mmcfd, but up to 35 percent of that is expected to be carbon dioxide, said Pertamina EP Cepu president director Adriansyah, who goes by one name only.
"There's a lot of impurities," he said, referring to sulfur and carbon dioxide content.
Production from the field is expected begin in late 2020 or 2021, and plateau for 16 years, after which it would begin to decline, said Adriansyah, adding that Pertamina targets signing a gas sales purchase agreement for Jambaran this year.
Pertamina hopes to supply gas from the Jambaran field to industry in Semarang, in Central Java province, via the Gresik-Semarang pipeline that is expected to be completed next year.
Indonesia's average daily natural gas output slipped to 1,131,000 barrels of oil equivalent (boepd), equal to about 5,932 mmcfd, in the first half of 2017, down from 1,189,000 boepd in 2016, government data presented on Tuesday showed.