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Medco Plans to Provide Natural Gas For Vehicles
Ririn Radiawati Kusuma | April 26, 2011

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Oil and gas company Medco E&P Indonesia aims to expand its downstream and retail business to offer natural gas to fuel vehicles starting next year, an executive said on Tuesday.

“We will try to expand to fuel for vehicles to compensate for our stagnant upstream business,” said Budi Basuki, president director of Medco E&P.

Demand for compressed natural gas for vehicles is low, and only Pertamina gas stations provide CNG, with its use limited to TransJakarta buses.

Medco E&P, a unit of Medco Energi Internasional, has three oil and gas blocks in Indonesia that produce about 180 million cubic feet per day of natural gas and 30,000 barrels of oil per day. Among the buyers for its gas are Palembang-based fertilizer company Pupuk Sriwijaya and state utility Perusahaan Listrik Negara’s power plant in South Sulawesi.

Given its gas production, Budi said Medco E&P has committed to provide up to 25 mmscfd for Jakarta. It plans to build one gas station in the capital next year.

“I hope we can start to sell gas fuel next year,” he said, adding that building a gas station would require about Rp 1 billion ($116,000) in investment.

The money will come from the company’s capital expenditure fund. It has allocated $233 million for capital expenditure this year, double its capex spending from last year, as it continues to exploit its oil and gas fields, including its 29.9 percent stake in the Donggi-Senoro natural gas project.

Budi said the plan was one of the company’s strategies to develop cleaner energy for vehicles.

“We will try to build the natural gas station first. Then we will cooperate with other parties, such as the government, to provide converter kits for vehicles,” he said.

Medco E&P has an agreement with Mandiri, a small company that provides CNG for vehicles in Palembang, to study the demand for the fuel in Jakarta.

“That also includes a strategy on how we can campaign for more CNG use by vehicles,” Budi said.