Govt approves Senoro-Matindok gas price: Pertamina
Thursday, June 11 2009 - 03:37 AM WIB
Speaking during a hearing with the House of Representatives? Commission VII, Karen said on Wednesday that Pertamina and Medco had raised the price of gas to be sold from the two gas fields to DSLNG by 31 US cent per million British thermal unit (MMBTU).
Assuming the world's oil price at $70 per barrel, the price of Senoro and Matindok wellhead gas is $6.16 per MMBTU and the FOB price of LNG produced by DSNLG is $10.98 per MMBTU. This is a good price if compared to the current situation where LNG is sold $4 per MMBTU at the time oil is sold at around $70 per barrel.
?The price change has been approved by the Energy and Mineral Resources Ministry,? she said during the hearing on Wednesday.
Karen said that Pertamina and Medco were now waiting for the government?s approval to go ahead with the plan to build a LNG plant because the head of agreement (HoA) on the supply of gas to Japanese buyers would expire within the next two weeks.
?If there is no government?s approval within the two weeks time, we will loss potential revenues from the project,? she added.
DSLNG, a consortium comprising of Mitsubishi of Japan, Pertamina and Medco, planned to build a 2-MTPA LNG plant. Gas for the proposed plant will be supplied from Matindok Block, which is operated by Pertamina, and Senoro-Toili Block, which is jointly operated by Pertamina and Medco.
The consortium had signed heads of agreement (HoA) with Japanese firms Chubu Electric Power Co. Inc. and Kansai Electric Power Co. to supply each of them with one million ton of LNG per year for 15 years starting 2012.
In the hearing, Karen said there were four scenarios on the development of Matindok and Senoro gas fields.
In the first scenario, gas from the two fields will be supplied to PT DSLNG and a local petrochemical industry. In this option, 345 million standard cubic feet per day (MMSCFD) from Senoro and 85 MMSCFD from Matindok will be supplied to DSLNG and other 70 MMSCFD from Senoro to the petrochemical industry or local buyers.
With a crude price assumption of US$70 per barrel, this option will generate state revenues of US$6.4 billion, while with the assumption price of $80 per barrel, it will provide state revenues of up to $8 billion.
By using this option, Karen said, the state would receive up to $430 million a year, based on the crude price assumption of $70 per barrel. ?I think it is the best alternative because it will generate more state revenues compared to other options,? she added.
In the second scenario, 335 MMSCFD of gas production (250 MMSCFD from Senoro and 85 MMSCFD from Matindok) is all supplied to PT DSLNG. In this scenario, the state will receive $5.7 billion.
In the third scenario, 335 MMSCFD of gas production (250 MMSCFD from Senoro and 85 MMSCFD from Matindok) is supplied solely to the local petrochemical industry. This option will only generate state revenues of $2.5 billion. This scenario will provide the lowest revenues because the domestic market will only be able to absorb 70 MMSCFD.
In the forth scenario, 265 MMSCFD gas is supplied to PT DSLNG (180 MMSCFD from Senoro and 85 MMSCFD from Matindok), and the other 70 MMSCFD for the local petrochemical industry. It can provide revenue of $5 billion but this scenario will result in the delay in the LNG project because with this option, the project designing plan should be readjusted.
He noted however the 265 MMSCFD gas supplies will make the LNG project no longer economically feasible, because the minimum requirement for LNG plant is around 335 MMSCFD, Karen said. (godang/bernard)