Medco Plans for Three Gas Power Plants

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  • TEMPO.CO, Jakarta - PT Medco Power Generation Indonesia, a subsidiary of PT Medco Energi International Tbk, will proposed the construction of three gas power plants, one of which will be built in Kuala Langsa, Aceh. The construction of the power plant at mouth of gas fields is aimed at boosting Medco's gas processing capacity in Block A, Aceh.

    "So that cooperation contract contractors who have gas reserves can establish IPP [independent power producer] and sell electricity," Medco Power president director Lukman Mahfoedz told Tempo on Tuesday, December 27, 2016.

    Medco will also develop gas power plants in Senoro Block and Simenggaris Block. In Aceh, Lukman said, Medco will build a power plant with a capacity of around 100 megawatts (MW).

    A feasibility study for the power plant is currently ongoing. Lukman could yet estimate the money that could be saved by Medco compared to using convention gas power plants. Lukman, however, said that gas demand for the power plant at mouth of gas filed in Block A would be 30 million standard cubic feet of gas per day (mmscfd)

    Serving as the operator, Medco owns 58.34 percent share in Block A. Medco however, is currently planning to increase its ownership by acquiring Kris Energy's 26.6 percent share, which would increase Medco's share ownership in Block A to 85 percent.

    Energy and Mineral Resources Minister was the first to propose construction of power plant at mouth of gas fields. According to him, power plant development must be based on energy resources available in respective areas. For instance, coal must predominantly be used to generate power in South Sumatra.

    The scheme, Jonan said, is imperative to reduce power generation costs. At present, power generation costs are rising due to high transport costs. As a result, power generation becomes inefficient. “We should avoid transporting gas from eastern to western [Indonesia], coal from the west to the east,” Jonan said.

    He plans to set up special scheme for low-cost power plants: mine-mouth coal power facilities and power plant at mouth of gas fields. State-owned electricity company PT PLN may make direct appointment of private power generation developers wanting to join the projects. Electricity price may be pushed down from current median power supply price of Rp2,000 per kilowatt hour (kWh).