Govt eases rule on DMO gas

The government has issued a new governmental regulation allowing gas producers to export the amount of output allocated for domestic market in case there is no local demand.

Under the Oil and Gas Law No. 22/2001, oil and gas producers are obliged to sell 25 percent of their oil and gas output on the local market. The Governmental Regulation No. 35/2004 that sets rules on the implementation of the law however fails to specify how long gas producers should await orders from domestic buyers.

The newly-issued Governmental Regulation No. 55/2009 gives one year after the discovery of gas reserves for potential domestic buyers to voice their interest to buy the domestic market obligation (DMO) gas. Within three months after the one year period, the Minister of Energy and Mineral Resources should notify gas producers about the local demand.

If there are local companies willing to buy the DMO gas, gas producers and potential buyers should start negotiating the price.

In case, there isn't anyone on the local market interested to buy the gas and/or gas producers and potential buyers fail to reach agreement on the price, gas producers may export their gas after getting permission from the government, according to the governmental regulation. (kanti)