BPH Migas: Toll fee of Arun-Belawan pipeline to automatically decrease if gas volume increases

By Febry Silaban

Downstream oil and gas regulator BPH Migas said that toll fee of the Arun-Belawan gas pipeline will go down automatically in line with increasing gas volume delivered to Medan and Belawan, North Sumatra.

"The greater the volume of gas that will be piped, the lower the toll fee will be. The volume now reaches 50 percent of the installed capacity," Chairman of BPH Migas Andy Noorsaman Someng told Petromindo.com.

He said that the government is assessing the potential for additional gas usage by state-owned electricity firm PT PLN.

"BPH expects gas prices in North Sumatra could reach US$9-11 per mmbtu," Andy said, adding that his agency has helped the government to decrease the gas price.

"The problem is not in the toll fee in lowering gas prices. Margin (for) traders should also be lowered, and multi-stage trading should be eliminated,? he said.

BPH Migas in October of 2014 set the toll fee for the Arun-Belawan gas pipeline at US$2.53 per mscf. While the fee was considered at the time as rather high, the regulatory body promised to review it after one year, once the operation and maintenance (O&M) costs have been known. In addition, during the first year of operation, only half of the capacity of the pipeline was utilized. With more capacity being utilized, the feel could be lowered. The O&M costs along with utilization rate, margin, and tax are seen as factors that affect the pipeline tariff.

The Arun-Belawan gas pipeline is an open-access facility, meaning that any party can use the pipeline to deliver gas as long as they pay toll fee to the owner, Pertagas, a subsidiary of state-owned oil and gas firm PT Pertamina.

Editing by Reiner Simanjuntak