Pertamina, PGN reached deal on gas price

State oil and gas company Pertamina said Wednesday it had reached deal with state gas company PGN on natural gas price that would in the future be transported from Pertamina's production sharing contractors' gas fields in South Sumatra to West Java.

Pertamina?s upstream director Iin Arifin Takhyan told Petromindo.com on a s the South Sumatra gas would be priced between US$ 2 to US$ 2.3 per million British thermal unit (MMBTU) at the wellhead.

Iin said Pertamina and PGN would sign memorandum of understanding on gas deal Thursday morning.

PGN has long planned to build a 640-kilometers gas pipeline capable of transporting up to 500 MMCFD of gas per day from the gas rich province of South Sumatra to the industrial province of West Java.

PGN needs some US$ 650 million to finance the project and the Japanese government had initially agreed to provide soft loan for the project.

However, uncertainties in Indonesian political conditions caused the Japanese government to suspend the talk.

It was still unclear how the project would be financed.

PGN earlier predicted that the increasing gas consumption prompted by complete phasing out of oil subsidy in 2005 together with the decline of gas reserve in West Java would create gas shortage of some 600 MMCFD in the next five years. (godang)