Medco seeks govt's guarantee for purchase of gas from Block A
Monday, February 5 2007 - 02:06 AM WIB
Medco Energi's director of development Rashid I Mangunkusumo said over the weekend that the payment had always become a problem when the company made transactions with the state enterprises, especially if the payment was in U.S. dollars.
?If state enterprises make payment in dollars, there has always been problems and they are frequently late. That's why investors have asked for the government's gaurantee,? Rashid said.
According to Rashid, Block A will be developed specially to meet the gas requirements of Pupuk Iskandar Muda (PIM) fertilizer company, which is located in Nanggroe Aceh Darussalam province. But so far there is no agreement on price with the PIM.
Rashid said he understands that PIM needs badly the gas to run its operations. There is Arun gas field, which is located near the PIM. But the problem is Arun's gas price is relatively very expensive because the price is fixed in line with its export price.
Medco, Rashid said is hoping that the price negotiations will begin this month. In order to reach a quick agreement, Medco is ready to host intensive talks. ?If necessary, we can meet every week,? he said.
Without a price deal, Rashid said, Medco as the operator of the Block A cannot submit its plan of development to the Upstream Oil and Gas Regulating Authority BP Migas.
According to Rashid, the gas reserves at Block A are just 600 billion cubic feet, not as big as Arun, whose reserves are at 8 trillion cubic feet. That's why it will not be economical, if Medco sells it in the form of LNG, which is generally exported abroad.
Besides PIM, the state electricity firm PLN is also interested in buying gas from Block A for its power plants in Aceh and Sumatra. (*)