Pertamina says JTB gas agreement with PLN awaits deal with Exxon

State-owned oil and gas firm PT Pertamina hopes to be able to soon conclude negotiation with ExxonMobil over the transfer of the latter?s interest in the Jambaran Tiung Biru (JTB) gas field development project to the former so as to pave the way for the signing of a gas sales and purchase agreement (GSA) with state-owned electricity firm PT PLN, Bisnis Indonesia reported on Tuesday.

Pertamina Finance Director Arief Budiman said that the process to transfer the ExxonMobil interest in the JTB project has now reached the final phase. Once this process has been completed, the company will immediately sign the GSA with PLN.

?The GSA (will be signed) in two months, once we?re clear (with the Exxon transaction),? he said.

Deputy Minister of Energy and Mineral Resources said in early August that ExxonMobil Cepu Limited was pulling out from the JTB project in Central Java due to disagreement over the selling price of gas from the project. Pertamina said on August 18 it was evaluating the asking price of US$121 million for ExxonMobil Cepu Ltd?s (EMCL) interest in the JTB.

ExxonMobil Cepu Limited owns a 41.4 percent interest in the JTB project. Meanwhile, Pertamina through Pertamina EP Cepu owned 41.4 percent and through Pertamina EP owned 8 percent, with the remaining 9.2 percent participating interest held by company owned by local administrations. With the transfer of ExxonMobil?s interest, Pertamina becomes the majority owner with about 90 percent shares in the JBT project.

Pertamina on August 8 signed a heads of agreement (HOA) with state-owned oil and gas firm PT PLN to supply gas from the JTB project at a price of US$7.6 per mmbtu. The HOA is expected to be followed up with the binding gas sales and purchase agreement, which will pave the way for Pertamina to start construction of the JTB project, targeted to start gas production in 2020.

The gas selling price agreement comes following lengthy negotiation process between Pertamina and PLN. Pertamina initially demanded for a gas price of more than $8 per mmbtu to make the JTB project economically feasible. But PLN has demanded for a lower price of $7 per mmbtu. The price agreement was made following intervention from Minister of Energy and Mineral Resources Ignasius Jonan. (*)