BPMIGAS promises to raise gas supply to PGN if price is right

Head of the upstream oil and gas regulator BPMIGAS R. Priyono said it will raise gas supply to the gas distributor PT Perusahaan Gas Negara Tbk (PGN) if gas purchase price is agreed at US$5-6 per MBBTU.

Under the existing contracts with PSCs,the price of gas purchased by PGN is set at below US$ 5 per MMBTU.

Priyono however did not disclose exactly how much additional gas will be delivered to PGN from production sharing contractors (PSCs). ?The additional gas volume depends on the gas price level they (PGN) agree on,? said Priyono.

When asked if PGN insisted on buying gas at a price below US$5-6 per MMBTU, Priyono said he is optimistic that PGN would agree on the price offered by BPMIGAS.

?PGN certainly will (agree). If the price is good, the compensation would be additional gas supply,? he said.

Wahid Sutopo, PGN's Director for Investment Planning and Risk Management, said earlier that if renegotiation of gas purchase price is not stated in the contract, there should be clear reasons for the renegotiation.

Priyono expects new gas purchase contracts with PGN with PSCs will be signed in early 2012. Therefore, BPMIGAS hopes the renegotiation will be finalized this year.

Priyono also said the renegotiation of gas price between producers or PSCs and domestic buyer, in this case PGN, could be used as ?reference? by the government in renegotiating LNG purchase price with a Chinese company Fujian, sent from Tangguh LNG plant.

If the renegotiation of gas purchase price with both domestic and overseas buyers is successful, it is estimated that the government would receive additional revenue of around US$ 6 billion per year. (giok/roffie)