Gas field operators, state power firm PT PLN and industries on Friday signed gas sales agreements (GSA) and heads of agreement (HOA) for a period of between six months and 20 years, worth a total of US$2.5 billion.

PLN will purchase 72 trillion British thermal unit (Btu) of gas from PT Medco E&P Indonesia over a period of five years starting in 2007, the Upstream Oil and Gas Regulatory Agency (BP Migas) deputy of marketing and finance, Eddy Purwanto, said Friday.

The supply will be used to feed gas-fired power plant Keramasan in South Sumatra. The contract is worth $197 million, PLN deputy head of primary energy Tonny Agus Mulyantono said.

The state firm also amended a previous contract with Kodeco Energy, which supplies gas to the Gresik power plant in East Java, adjusting the prices and volume. The amended agreement will be effective until 2013, with a remaining contracted volume of 171.56 trillion Btu.

"The prices (in the agreements) are below $3 per million British thermal unit," said Tonny.

Aside from the definitive agreements, PLN also signed an HOA with joint operating body (JOB) Pertamina Amerada Hess Jambi Merang to supply gas for its power plants in Jambi. The gas operator is expected to supply 323.7 trillion Btu over 12 years starting in 2008, in a contract estimated to worth nearly $970 million.

"We expect to sign a GSA within three months," said Tonny.

PLN is seeking new gas supplies to reduce its dependence on more expensive petroleum-based fuel.

However, Tonny said a significant decline in high speed diesel usage would only be apparent after 2008, if the gas contracts already signed began on schedule.

Another electricity-related GSA was signed between Medco E&P and PT MEPPO-GEN for eight years starting in 2006 for the Gunung Megang power plant in South Sumatra. Elnusa Bangkanai Energy Ltd. and PT Medco Power also signed an HOA for 135.5 trillion Btu of gas to supply a power plant in Central Kalimantan over 20 years.

During a ceremony, Medco E&P Lematang signed an HOA with state gas distributor PT Perusahaan Gas Negara (PGN) to supply gas from its fields in South Sumatra to PGN customers in West Java. The contract period is 10 years starting in 2008, with a total gas supply of 135 trillion Btu estimated in value at $350 million.

List of gas agreements signed Friday

No. Supplier Buyer Contract (years) Total amount (trillion BTU)

1. Medco E&P Indonesia PLN 5 72
2. Medco E&P Indonesia PT MEPPO-GEN 8 34.6
3. PetroChina PT Tanjung 5 2.74

International Jabung Jabung Power 4. Lapindo Brantas PT Indogas Kriya Dwiguna 5 1.64
5. Benuo Taka Pertamina 0.5 0.24
6. Kodeco Energy Ltd.* PLN 8 171.56
7. Elnusa Bangkanai Energy Ltd. ** Medco Power 20 135.5
8. JOB Pertamina Amerada Hess Jambi Merang ** PLN 12 323.66
9. Medco E&P Lematang** PGN 10 135

All contracts are gas sales agreements (GSA), except * (amended GSA) and ** (heads of agreement).