Pertamina plans lower price for gas from JTB project
Friday, October 7 2016 - 03:32 AM WIB
State-owned oil and gas company PT Pertamina plans to sell gas to be produced from the Jambaran-Tiung Biru (JTB) fields in East Java at a lower price to state-owned electricity firm PT PLN to help ensure that the development of the US$6.6 billion project can immediately start.
Pertamina Upstream Director Syamsu Alam said on Thursday that the company plans to sell the gas at around $7 per mmbtu, lower compared to $8 as set in an earlier Heads of Agreement between the two firms. ?PLN has objected to the previous price ($8). For the Tiung Biru project to proceed, there will be discussion on what price level is affordable (for PLN),? he said.
Pertamina is set to become the first buyer of the entire planned 170 mmscfd of gas output from the JTB project, operated by subsidiary PT Pertamina EP Cepu (PEPC), which were originally targeted to start production in the first quarter of 2019, after state-owned fertilizer firm PT Pupuk Kujang canceled its earlier plan to buy 70 mmscfd of the planned output.
To help ensure the JTB fields are economically feasible for PEPC to develop, and gas price can be lower, the government has offered various incentives for the company including investment credit, higher revenue split, and accelerated depreciation.
The JBT project comprises of the Jambaran and Tiung Biru fields. The Tiung Biru field is located within PEPC?s operations area which is adjacent to the giant Cepu oil and gas block jointly operated by ExxonMobil Cepu Limited (EMCL). The Jambaran gas field is located within the Cepu block. EMCL and PEPC agreed in September 2012 to unitize both fields with PEPC serving as operator.
Editing by Reiner Simanjuntak