Government to issue presidential regulation on gas supply chain

The government is drafting a presidential regulation to improve the country?s gas supply chain management.

The regulation will replace the Ministry of Energy and Mineral Resources Regulation No. 2700 K/11/MEM/2012 on Blueprint on the Network of National Natural Gas Distribution and Transmission for 2012-2025.

?The drafting of the regulation aims to make the gas supply chain management more effective,? Director of Oil Gas Program Oversight Agus Cahyono Adi said in a statement on Thursday.

Agus said the new presidential regulation will regulates among others division of distribution business area, gas aggregators and infrastructures needed to develop certain areas or regions.

?The division of distribution area aims to prevent business operating area overlaps. We don?t want gas pipelines overlapping each other. We want to create a natural monopoly,? he said.

With regards gas aggregators, Agus said, the government wants them to harmonize gas prices through a gas pool price mechanism. The government has longed to have gas aggregators. They will function to transfer gas from oversupplied areas to areas experiencing shortages and combine expensive gas with cheap one. There are two state owned companies that can act as gas aggregators at present, namely PT Pertamina (Persero) and PT PGN (Tbk). Both firms can cooperate in performing the task.

At present, gas prices are varied. Gas aggregators are expected to reduce differences between the prices. They can buy gas from various sources, either the expensive or the cheap one, and mix them in order to harmonize selling prices. The right to determine gas prices lies with the government. The aggregators? task is only to harmonize the prices. Based on the formula, they can set different prices for industrial customers, households and power generation.

The new presidential regulation will also map areas where gas infrastructures need to be built. In areas which are less developed economically, mini receiving terminals will be built. In frontier areas, the government will build infrastructures, which will be operated by private companies.

Editing by Johannes Simbolon