Singapore gas contract should be honored: BPMIGAS

Oil and gas upstream sector regulator BPMIGAS called on all parties to honor the gas sales contracts with Singapore amid efforts by the government to renegotiate the contracts in an effort to reduce the volume of gas exports to the country

?Let?s honor the contracts. We have studied (the contracts). There isn?t any loophole in the country that may allow us to reduce the volume of gas exports. The only alternative is a G-to-G negotiation,? BPMIGAS?s vice chairman Hardiono said on Wednesday.

Last month, Coordinating Minister of the Economy Hatta Radjasa said the government would set up a team to renegotiate with the Singaporean government that Indonesian gas producers may reduce their gas supplies to Singaporean buyers. The move was taken in a bid to provide more gas supplies on the domestic market amid increasing demand for the fuel.

Hatta said the government chose a G-to-G negotiation because it considered a business-to-business negotiation was difficult to do.

Hardiono noted however the volume of gas exports to Singapore had been declining due to the lower gas outputs of the Jabung and Jambi blocks in central Sumatra. The daily contract quantity (DCQ) of gas supplies from Sumatra to Singapore now stands at only 225 mmcfd or between 78-89 percent of the maximum daily quantity (MDQ) set in the contracts.

?As a matter of fact, Singapore has right to ask for an increase in supplies. Don?t forget the fact that we sell gas to Singapore at a premium price of US$12.93 per mmbtu,? he said.

Indonesia has been exporting natural gas to Singapore through pipelines since 2001 from West Natuna and since 2003 from Sumatra. The Singaporean buyers include SembCorp. (Benard)