Conoco, PLN finalize gas sales agreement

ConocoPhillips is still finalizing the sales and purchase agreement on the supply of its gas to state owned electricity company PLN, Investor daily reported on Wednesday.

The deputy chairman of BP Migas, Kardaya Warnika, said in Jakarta on Tuesday that the two companies had reached agreement on the price of gas but they had yet to sign the contract because they still needed more time to discuss the penalty that should be given if there was a delay in supply.

?All the deal except those related to the penalty on late supply had been agreed upon,? Kardaya said, adding that the negotiation on the detail of the penalty on late supply took longer time because the existing gas sales contract had yet to cover such a kind of penalty.

He said that the penalty on late supply could be imposed on Conoco as the gas supplier or Perusahaan Gas Negara (PGN) as the provider of the gas pipeline.

According to him, Conoco and PGN had also reached agreement on the fee for the use of the latter?s pipeline in the supply of gas to PLN. The two companies had, for example, agreed on the toll fee of 84 US cent per mmbtu for the supply of gas up to 300 mmbtu. ?If the volume exceeds 300 mmbtu, the fee will be around 5 US cent,? he said.

He said that the price of gas to be sold by Conoco to PLN has been agreed at US$2.45 per mmbtu on the first year. For the second to fifth year, the price of the gas will be increased to $2.7 per mmbtu. The price on average will be $2.69 per million British Thermal Units. (*)