Petronas wants PLN to raise the price of its gas

Malaysian oil company Petronas has asked state owned electricity company PLN to buy the company's gas from the Muriah gas field in Central Java to the 600-megawatt Tambak Lorok higher than the US$2.78 per million British thermal unit (BTU) stated in the existing sales and purchase contract, Investor Daily reported on Saturday.

"Petronas and PLN will soon renegotiate the sale price of the gas from the Muriah block, because after being reassessed, the approved price was still too low," said Abdul Rahim Hanifiyah, the president director of Petronas Carigali, the Indonesian unit of the Malaysian company. He, however, refused to unveil the new price to be offered to PLN.

He also said that Petronas would temporarily halt development activities at the block until the two companies reached an agreement on the new prices.

PLN's spokesman Muljo Adi confirmed that Petronas had asked to increase the price of its Muriah gas to between US$3.4 to US$3.5 per million BTU from US$2.7 per million BTU stated in the existing gas sales agreement.

But, he said that PLN would insist to stick the price stated in the existing contract. He admitted that the price of the Petronas' gas was far below the international gas price which reached between US$7 and US$8 per million BTU, or the prices of gas sold to other industrial users in the country which reached between US$3 to US$3.5 per million BTU.

Petronas acquired the entire participating interest in the Muriah PSC from BP in July 2004, after the Kepodang field had been fully appraised.

The project includes the long-term sale of gas; construction of production and in-field infrastructure; and the construction of a 205 km subsea pipeline and 2.5 km onshore pipeline to transport the natural gas from offshore production facilities for delivery at the power plant.(*)