Gas policy must be clear: IPA

The government needs to design a clear gas policy immediately to meet the domestic as well as export needs. Frequent inconsistent statements from government officials regarding allocation of gas for exports and domestic needs are creating doubts among producers to increase their production, Kompas newspaper reported in its Thursday edition.

This was conveyed by the head of Indonesia Petroleum Association (IPA) Chris Newton at the Indonesia Investment Conference in Nusa Dua, Bali on Tuesday.

?Investors fully agree with the government on the importance of usage of coal and gas for the domestic needs,? Chris said.

He said oil and gas investors welcomed the concept of the allocation of 25 percent of gas for the domestic usage under the revised Law No. 22/2001 regarding Oil and Gas. But in practice, the government has been issuing different statements regarding allocation of gas.

?Initially it said that a certain percentage of liquefied natural gas from the exports would be diverted. Later it said the gas was needed for domestic usage. As a result, producers understood that the government will possibly use 100 percent gas for domestic needs," Chris said.

He added that investors don?t like this uncertainty. With a 30 years of long history of gas exploration in Indonesia, producers want to retain their investments. There are still 97 trillion cubic feet of gas reserves, which have not yet been exploited. And these reserves will be used for domestic use, especially in power sector.

?Certainly, the government has the right to decide the buyer of its gas, but if it is left for the market to decide it will be more better. There are certain gas reserves which will be more beneficial if they are exported rather than sold in the domestic market in terms of economic calculations,? Chris said.(*)