Govt to cut its gas production share to lower gas price
Friday, September 11 2015 - 01:05 AM WIB
As part of President Joko Widodo?s newly-launched First Phase Economic Policy Package, the government will reduce its gas production share in order to lower gas prices for domestic industries, according to Minister of Energy and Mineral Resources Sudirman Said.
"The policy to lower the gas price is contained in the new presidential decree approved this morning. The decree will be applied to new contracts, starting Jan. 1, 2016," said Sudirman in Jakarta.
He added, to create cheap gas prices for the domestic industry, there should be also a consolidation of value chain from upstream to downstream side.
Director General of Oil and Gas Wiratmaja Pudja explained the new presidential decree replaces the Minister Regulation 03/2010 on Allocation and Utilization of Natural Gas for Domestic Needs.
By the new regulation, gas prices would be adjusted for selected industries that create great added value to the gas or use gas as a raw material for productions, such as petrochemical, fertilizer and power industries, Wiratmaja said.
"For example, the Jambaran Tiung Biru gas project. If the government?s take of the gas from the project is reduced, then it can lead to a growth of investment by over US$2.8 billion," he said.
Wiratmaja added that there are seven projects where the new regulation is very likely to be applied, They are among others Jambaran Tiung Biru project (for fertilizer production), Bontang V project (for the fertilizer production of PT Pupuk Kaltim), Bulu PSC-KrisEnergy project (for electricity), Simenggaris project (for mini refinery), Bangkanai-Ophir project (for electricity), Sengkang LNG project (LNG plant for eastern Indonesia), Lampung FSRU project (for gas power plant and industry in western Java).
Editing by Johannes Simbolon