It's difficult to give long-term gas sales contract: official

It would be difficult for the government to provide a long-term of natural gas sales contract of up to 10 years from the current three year period, according to the director general of oil and gas at the Ministry of Energy and Mineral Resources, Rahmat Sudibyo.

Rahmat, nevertheless, said on Thursday (Jan. 18) that the government could consider giving long-term gas sales contract if it was wanted by the investors.

He made the statement to comment a proposal from the president of state-owned fertilizer company PT Pupuk Kaltim, Syaiful Amir, that the government should extend the gas sales contract from three years to 10 years period.

What concerns the government, according to Rahmat, is that the current gas sales price of US$1.30 per Million British Thermal Unit (MMBTU) for fertilizer company is subsidized price. The commercial price for natural gas should be $2.00 per MMBTU.

"If this (long-term contract) is what the investors want, the government would consider this in our long-term perspective. However, it needs to be considered that this domestic gas incentive is meant to be short-term," he said.

He explained that the domestic gas incentive policy that provided subsidy for gas sales to fertilizer companies aimed to help farmers when fertilizer prices soared in time of strengthening U.S. dollar against the rupiah and the rising international gas prices. And therefore, such a policy would not be applicable for commercial purposes. (*)