Gas producers provide 'subsidy' of Rp40t to RI economy

Gas producers have indirectly provided a lot of 'subsidy' to the country?s economy as most of the gas produced is still sold below market price, R. Priyono, Chairman of upstream authority BPMIGAS has said.

During a hearing with the Commission VII of the House of Representatives (DPR) in Jakarta on Thursday, Priyono said that in 2011, gas producers had provided a 'subsidy' of at least Rp40 trillion to the country?s economy. The amount is reflection of the difference between prices of gas sold to the domestic market and those of export market.

?The average gas price in the domestic market is US$5-6 per MMBTU, while those exported is US$12-13 per MMBTU. It means that gas producers have indirectly provided a Rp 40 triliun 'subsidy' to the country's economy in 2011,? he said.

In the last five years, the gas supply for the domestic market rose more than 200 percent, mostly due to increase in consumption for power generation and industrial activities.

During the hearing, Priyono emphasized the need to review the selling price of gas in the domestic market to ensure that oil exploration activities are still attractive to investors. He feared that if gas prices in the domestic market were to stay at present level investors would be discouraged to carry out gas exploration activities.

Editing by Roffie Kurniawan