Mandatory gas sales will be applied only to new producers

The minimum 25 percent domestic sales obligation or Domestic Mandatory Obligation (DMO) will be applied only to gas producers licensed after the issuance of the 2001 gas and oil law, said oil and gas exploration and production authority BP Migas Kardaya Warnika.

Kardaya emphasized that oil gas producers licensed before the issuance of the law would not be affected by the new regulation. "This includes gas production sharing contractors which have been taken over by other companies," he said monday.

A number of gas producers have changed hands during the last several years including Kakap block (Natuna) which has been taken over by Star Energy from ConocoPhillips, Kangean block (East Java) by PT Energi Mega Persada from BP Indonesia, and Muriah block (Central Java) by Petronas from BP Indonesia. ExxonMobil and ConocoPhillips will also likely sell their ownership in the Block A gas field in Aceh this year.

The government is amending the article related to domestic gas obligation in the oil and gas law. According to the existing stipulation, gas producers are only required to sell up to 25 percent of their gas production shares in the domestic market. In the amended article, they will be required to sell at least 25 percent of their production shares. (Godang)