PEPC: No deal yet with PKG over price of gas from Jambaran-Tiung Biru project
Monday, May 30 2016 - 12:58 AM WIB
PT Pertamina EP Cepu (PEPC), a subsidiary of state-owned oil and gas firm PT Pertamina, said that it has yet to reach agreement with state-owned fertilizer firm PT Pupuk Petrokimia Gresik (PKG) over price of gas from the Jambaran-Tiung Biru (JTB) fields in East Java.
?Total gas volume of 162 mmscfd will be delivered, 91 mmscfd of which to PT Pertamina, and 81 mmscfd to PKG. A Gas Sales and Purchase Agreement (GSPA) with Pertamina has been completed, while there remains a price problem over gas (deal) with PKG. It is still being discussed, so there is no deal yet,? said PEPC President Director Adriansyah to Petromindo.com over the weekend.
He said that the prospect of a deal has been undermined by the possibility of PKG moving its manufacturing facility from East Java to West Java. ?On the other hand, we need certainty because when we start on stream in 2019, and the 81 mmscfd gas volume (allocated for PKG) could not be absorbed, we?ll suffer losses,? Adriansyah said, adding that PEPC hopes a deal with PKG can be achieved before it signs the EPC contract for the JTB project.
The JBT project is expected to start production in the first quarter of 2019. Tiung Biru field is located within Pertamina EP?s Cepu operations area which is adjacent to the giant Cepu oil and gas block jointly operated by ExxonMobil Cepu Limited (EMCL), a unit of ExxonMobil Indonesia, and Pertamina EP Cepu (PEPC). The Jambaran gas field is located within the Cepu block, which is operated by EMCL. EMCL and Pertamina EP agreed in September 2012 to unitize both fields with PEPC serving as operator.
In September of last year, the government proposed to lower the gas price from JBT fields to US$7 per mmbtu from the initial proposal of $8 per mmbtu for fertilizer industry.
On May 3 of this year, President Joko Widodo signed a new presidential regulation to lower gas price for certain industries including fertilizer. The Ministry of Energy and Mineral Resources is expected to issue the implementing regulation in June.
Editing by Reiner Simanjuntak