Ministry of Industry calls for cheaper gas for local industries
Friday, May 5 2006 - 02:26 AM WIB
Speaking to reporters at his office on Thursday, the director general of agro and chemical industries Benny Wahyudi said that offering a special gas price to local industries was part of the master plan prepared by the ministry of industry in supporting the government's campaign to promote the use of gas in the country.
He said that the price of gas which at present reached between US$2.7 and US$3 per million British thermal unit (MMBTU) was still to too high for most industries.
"The gas should be ideally sold at US$2 per MMBTU or lower so that the local industries will voluntarily choose to use gas rather than fossil-based fuels for their operation," he added.
According to him, in order to be able to provide a special price, the government should provide a subsidy. "The subsidy is not always in the form of cash. The government should, for example, increase the portion of the production share allocated to production sharing contractors to 50 percent," he said.
At present, the production share allocated to production sharing contractors is about 30 percent, and the other 70 percent going to the government.
"The production sharing scheme also needs to be changed in order to encourage more investors to be involved in gas exploration and production business," he added.
Without such incentives, he feared that the future gas production would no longer be enough to meet the surge in the gas demand. Based on the ministry's calculation, the gas production between 2010 and 2015 would suffer a huge deficit if no efforts are made to speed up the development of new gas fields.
In addition to the opening of new gas fields, the government should also stop all LNG exports in order to meet the expected sharp increase in the demand for gas in the domestic market. (*)