BPMIGAS: gas floor price to be set at $5/mbtu starting 2012
Monday, December 19 2011 - 04:39 AM WIB
The move was an attempt to bring the prices more in line with international market price and to lure contractors to sell their gas to domestic buyers.
BPMIGAS Chairman R. Priyono said that some contracts still set purchase price of below $2/MBTU, nearly a tenth of current international price of $17/MBTU. The agency hopes with upward price adjustment, it would be attractive for contractors to supply gas to domestic buyers.
On the other hand, domestic buyers,--most of them are industries--, are willing to buy at a higher price of up to $11/MBTU as the price is still only about one-seventh of oil price.
Operations Deputy Rudi Rubiandini said that the agency is finalizing contract renegotiations and expect the $5/MBTU floor price can be reached in 2012. On the other hand, the agency will also help renegotiate prices to international buyers; one example was the gas from ConocoPhillips? Natuna B Block to Duyong, Malaysia which earlier this year raised to $6.7/MBTU from $2.7/MBTU previously.
Rudi added that around 47 percent of gas production is being supplied to domestic buyers and that slapping a mandatory quota for domestic supply (domestic market obligation) for each contractors will be less effective than raising prices to a level attractive for contractors.
He also said that there are several contractors which supply directly to international buyers due to lower logistic costs compared to selling it domestically. (*)