BPMIGAS continues pushing for gas purchase price contract renegotiation
Monday, October 17 2011 - 02:19 AM WIB
BPMIGAS legal division head Zikrullah said over the weekend that $3 per mmbtu was no longer sufficient for producers to fund production.
Zikrullah said that it was important for gas distributors, including state gas distributor PT Perusahaan Gas Negara (PGN), and users to buy at economic prices to allow producers to maintain sustainable production as well as to increase state income.
?We believe that the renegotiation plan will proceed as expected. In September, we successfully adjusted the gas price from the Maleo field [operated by Australia-based energy firm Santos] from around $3 to around $5 per MMBTU,? Zikrullah said.
PGN as buyer and Santos as producer basically agreed to the price adjustment, he added. A formal agreement finalizing the new price would be signed in the near future.
The Maleo field is located in Sumenep, East Java, and produces an average of 120 million standard cubic feet per day (MMSCFD) of gas, which is channeled to businesses in East Java through the pipeline network owned by PT PGN.
BPMigas said earlier that some gas buyers continued to purchase gas at prices between $1.60 and $1.80 per MMBTU, despite the current domestic price having reached between $5 and $6 per MMBTU.
The agency estimated that if all natural gas contracts with a price of lower than US$3 per MMBTU were successfully renegotiated, the state could earn an additional $6 billion a year.
PGN previously claimed that the company would agree to adjust its purchase price if the government could assure it additional supplies.
Pertamina EP, the upstream business unit of state oil and gas firm PT Pertamina, also said it was committed to renegotiating its gas prices. Currently, 30 percent of its gas production was bought by PGN for lower than $4 per MMBTU.
The company expected that the price of its gas might reach an average of $4.50 per MMBTU by 2013. (*)