Pertamina, Petronas agree on gas price

State oil and gas company Pertamina said on Thursday it had reached an agreement with Malaysian state oil and gas company Petronas on the price for the future gas supplies from the West Natuna area in the South China Sea to Malaysia.

The agreement on the price paved the way for both parties to sign a final contract for the gas supplies on April 1, this year, Pertamina's production sharing contract (PSC) director Iin Arifin Takhyan told a press conference.

"Negotiations on commercial aspect had been 70 percent completed. The gas sales agreement is expected to be signed on April 1, this year and gas supply is expected to start 15 months after the signing of the gas supply agreement," Iin said.

Pertamina signed last year preliminary agreements to supply gas from the Belanak block in West Natuna owned by Conoco Indonesia Inc, a subsidiary of American oil and gas firm Conoco Inc., to Petaronas' gas terminal at the Duyong field.

The gas will be sent throughout a contract period of 2002 to 2023 through a 97-kilometer underwater gas pipeline.

Iin said that both parties agreed to set the price at 115 percent of the international price for high sulfur fuel oil (HSFO).

Floor price for HSFO was set at US$72.237 per metric ton and its ceiling price at $118.206 per metric ton, he said.

The price for the gas supply thus ranges between $2.13 per million British thermal unit (MMBTU) and $3.48 per MMBTU.

According to Iin, the contract will generate US$8.5 billion for Indonesia throughout the contract period, including $2.9 billion in the government's income and $1.9 billion in the contractor's share. (Alex/Godang)