Pertamina refuses to lower gas prices to fertilizer producers

State owned oil and gas company Pertamina has openly refused the request made by the country?s fertilizer producers to lower gas prices, Koran Tempo reported on Monday.

?I think it is not as easy as we thought to lower prices of gas, because it is related to the production cost of the country?s gas producers,? Pertamina?s director for downstream operation, Muchsin Bahar, said in Jakarta on Saturday.

Members of the association of fertilizer producers met Minister of Agriculture Bungaran Saragih early last week to help them lobby Pertamina to cut the price of gas sold to them. According to the fertilizer producers, the current gas prices are still too high.

At present fertilizer producers buy gas from Pertamina at a subsidized price ranging from US$1.8 and $1 per MMBTU. The price level is much higher than the market price of about $3 per MMBTU.

Muchsin said that the price of the gas sold to fertilizer producers is still too low if it is compared to the production cost of the country?s gas producers. But the fertilizer producers association said that although the price of gas sold to them had been subsidized but it is still the highest in the world.

According to the association, the gas price is US$0.85 per MMBTU in Malaysia, $0.50 in Russia and about $0.60 in the Middle East. (*)