BPMIGAS: Domestic gas price far lower than exported gas price
Tuesday, January 24 2012 - 07:30 AM WIB
The upstream authority BPMIGAS said the average price of gas for domestic consumption ranged between US$4 and $4.5 per million British thermal unit (MMBTU) in 2009-2011, far lower than the gas price for export, which ranged between US$10 and $11 per MMBTU.
The low domestic gas price has discouraged Production Sharing Contractors (PSCs) to develop their gas fields to meet domestic needs, which in the long run will threaten sustainability of gas supply for domestic industry.
In fact, the low domestic gas price does more harm than good as it will deal a big blow to domestic industry and consumers.
?The margin between the export price and domestic price shows that we provide subsidy to the domestic industry by Rp 40 trillion per year. In other words the domestic industry has enjoyed Rp 120 trillion in subsidy from the cheap gas price so far,? spokesperson of BPMIGAS Gde Pradnyana said in a media statement.
?Piped domestic gas price averaged 40-50 percent lower than export gas price from 2009 to 2011. PGN gas price was set even lower than the average national price of $5.17 per MMBTU. Supply for COPI to PGN has been valued at only $1.8 per MMBTU, while exported gas was sold at between $13 ?14 per MMBTU in 2011," he said.
"LNG price for export averaged $12-13 in the same period. Based on our calculation we have subsidized the domestic gas price by Rp 40 trillion per year,? he added.
The revenue from gas and oil goes to the state budget and is disbursed to cover public expenditures like infrastructure, education subsidy, fuel subsidy, electricity subsidy and so forth.
Editing by Roffie Kurniawan