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The biggest state-owned fertilizer producer, PT Pupuk Kalimantan Timur, announced that it would move forward with a plan to build a fifth plant in East Kalimantan after upstream energy regulator BPMigas gave assurances that the company would receive enough natural gas to power the factory.

“After two series of meetings, an agreement has been concluded by Pupuk Kaltim and BP Migas, under which [BPMigas] has agreed to distribute 80 million metric standard cubic feet per day of gas to our plants,” Pupuk Kaltim president director Hidayat Nyakman told the Jakarta Globe by phone on Sunday. “Our expectation is that the supply will be for a contract of 20 years, starting in 2011,”

BPMigas said France-based oil and gas company PT Total E&P Indonesie, US-based company PT Chevron Pacific Indonesia and Singapore-based Pearl Energy Indonesia had agreed to supply the fuel.

Hidayat said the agreement was expected to be signed before Dec. 15.

However, the cost of the gas has yet to be established. “There will be a meeting on Monday to discuss the price for the gas,” Hidayat said.

Pupuk Kaltim plans to more than double fertilizer production to 3,500 tons per day from 1,700 tons once the new plant becomes operational.

The company expects to open tenders for construction after it signs the gas agreement with BPMigas. The plant is expected to cost $60 million and be completed by 2013 or 2014.

“Before the new plant is ready, we will use the gas to supply Plant No. 2,” Hidayat said.

Minister of Industry M S Hidayat said on Thursday that he would facilitate negotiations over natural gas prices between BP Migas and Pupuk Kaltim.

“This is one of our efforts to fulfill the increasing of fertilizer demand by raising the fertilizer industry’s total production capacity by 55 percent to 8.5 million tons by 2013 from 5.5 million tons this year in response to rising fertilizer demand,” Hidayat said.

The state is also planning to slash fertilizer subsides next year to lift prices.