GSA with PIM remains in limbo, Medco may sell gas to Pertamina
Monday, April 7 2014 - 11:47 AM WIB
IDX-listed oil and gas firm PT Medco Energi Internasional is thinking the option of selling gas from Matang field in Block A in Aceh to state owned oil and gas firm PT Pertamina as gas sales agreement (GSA) with state owned fertilizer firm PT Pupuk Iskandar Muda (PIM) remains in limbo.
The firm has been negotiating with PIM on a GSA for the gas for long, but the fertilizer firm still refuses to sign the GSA, forcing Medco to delay construction works at the block.
"Problems remain for the signing of the GSA. It should have been signed last month, but PIM was asking to review the previously-agreed volume of gas that it will take from Block A," Medco's President Director Lukman Mahfoedz told Petromindo.com on Monday.
Medco and PIM planned to sign the GSA today (Monday), but the plan failed to materialize, according Head of Communications and Protocol at upstream authority SKK Migas Zudaldi Rafdi.
"The signing of GSA has been indefinitely postponed because either the minister of energy and mineral resources or vice minister was not available to witness the event," said Zudaldi to Petromindo.com.
Lukman was clearly disappointed.
"We hope PIM agree with what has been previously agreed and soon sign the GSA with us. Otherwise, the project will be in limbo and all parties will suffer losses, including us as investor, PIM as gas buyer and also the local community and the local government of Aceh," he said.
According to him, technically, construction at the gas field is ready to begin as land acquisition has been almost completed and the Engineering, Procurement, and Constructon (EPC) contractors have been ready to do their job. "But we as investor are not going to start this project unless a GSA with PIM has been signed, considering the huge investment of more than US$400 million, that will be spent for the project," he pointed out.
Lukman suggested that if PIM remain undetermined over the GSA, Medco will propose to the government and upstream authority SKK Migas find alternative buyers.
"Currently we are discussing with Pertamina which has been willing to take gas from Block A. Pertamina will deliver the gas to North Sumatra which is also experiencing a severe shortage of gas supply," he explained.
Editing by Johannes Simbolon