Govt offers to reduce gas revenue share on West Natuna

The government is considering increasing the 30 percent share of gas revenue that Premier Oil Plc, a UK based-oil company that operates the West Natuna Block A concession, to as much as 49 percent to persuade the firm to sell the gas to Batam instead of Singapore, Energy Minister Purnomo Yusgiantoro said in Jakarta Monday.

?We are willing to get as low as 51 percent? of the revenue, Purnomo said.

Under the standard production sharing contract, the government takes 70 percent of gas output of contrators while contractors keep the rest.

By cutting the government's production share to as low as 51 percent, the government hoped Premier would be willing to sell its gas to Batam at US$3.50 per million British thermal unit, the highest price that power generated from the fuel remains competitive, he said.

Prices of gas channeled outside the country through pipes or exported as liquefied natural gas are about $8 per million a British thermal unit, Purnomo said.

Premier has discovered Gajah Baru gas fields in Block A with reserves amounting to 500 billion cubic feet, Kardaya Warnika, chairman of the state oil and gas regulator BPMigas said Sunday.

The company should be able to channel 120 million standard cubic feet a day to Batam for 20 years, Warnika said.

Premier has channeled gas from its Anoa and Kakap fields in West Natuna through a 400-kilometer underwater pipeline to Singapore since 2001.

The company is in negotiations for further gas sales to the city-state, Premier said on its Web site. (godang)