Govt to review production sharing system with gas producers

The government will overhaul the production sharing system with gas producers in a bid to boost the use of gas in the country, Neraca newspaper reported on Monday.

The present system was set up in 1966. Normally, under the present system, production sharing contractors (PSC) keeps 30 percent of their gas output with the remaining 70 percent going to the government. But, in frontier areas, contractors has the right to keep a larger portion of gas output.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the overhaul may lead to the reduction of the government’s share.

“So, the government is willing to lose certain amount of its income in order to provide gas to the state electricity company Perushaan Listrik Negara (PLN) and the households. That’s why, we will review the production sharing system with PSCs,” Purnomo said at a seminar on electricity in Jakarta last week.

The minister admitted that all the country's gas producers do not want to have their margin reduced.

It remains unclear if the review will be carried out on both the present and future production sharing contracts or only on the future contracts.

According to Purnomo, many consumers will enjoy cheaper gas following the government's decision.

“Moreover, it will have several multiple effects including in tax payments, manpower and the increased use of gas,” he added.

Purnomo added that Indonesia has at present 150 trillion cubic feet gas reserves. (*)