Gas producers required to sell 25% output under DMO scheme

Gas producers are required to sell 25 percent of their output on domestic market to help meet the surge in gas demand from fertilizer producers, power plants and other industries, Kontan reported on Wednesday.

The mandatory gas supply for the domestic market, known in the industry as Domestic Market Obligation (DMO, stipulated in the Energy and Mineral Resources Minister?s regulation No. 3/2010 dated Jan. 27, 2010 is imposed only on new production sharing contracts or those in the process of extension.

The requirement, however, does not affect contracts signed before the issuance of the regulation, or producers which have already signed sales and purchases agreements or memorandum of understanding (MoU) with buyers for their gas production.

?The regulation is based on the Oil and Gas Law,? Director General of Oil and Gas Evita Herawati Legowo said in Jakarta on Tuesday.(*)