SKK Migas to start offering flare gas potential this year
Tuesday, July 4 2017 - 01:42 AM WIB
Petromindo
Upstream authority SKK Migas is expected to start offering flare gas potential in the country?s upstream oil and gas operations to investors in the third quarter of this year, according to a source.
The source said that SKK Migas is currently in the process of making inventory of the flare gas potential of upstream oil and gas contractors, before offering them to the investors. The inventory progress has so far reached 30 percent.
?Investors utilizing the flare gas are also expected to develop the required infrastructure facilities including gas pipeline. The price of the flare gas will be made in accordance with the stipulations in the Ministerial Regulation No 32/2017,? the source told Petromindo.com on Monday.
?The SKK Migas team is expected to start offering the flare gas potential before the fourth quarter of this year,? he added.
Parulian Sihotang, Deputy for Finance and Monetization at SKK Migas, declined to provide much comments, saying briefly that SKK Migas is still making coordination with the Directorate General of Oil and Gas at the Ministry of Energy and Mineral Resources in offering the flare gas potential to investors.
Minister of Energy and Mineral Resources Ignasius Jonan issued in May Ministerial Regulation No 32/2017 on the utilization and selling price of flare gas in upstream oil and gas activities.
The objective of the new regulation is to reduce flaring volume and greenhouse gas emission in upstream activities.
According to a copy of the regulation, the flare gas can be used for power generation, pipeline gas for industries/households, compressed natural gas, LPG, and dimethyl ether production, or other purposes.
Upstream authority SKK Migas will offer the flare gas potential to the buyers by publishing data on flare gas potential of the upstream oil and gas contractors.
In case there are more than one buyers, SKK Migas will propose the buyer to the Minister based on evaluation results of flare gas potential offering team.
In case there is only a single buyer, SKK Migas will make direct appointment and recommend it to the Minister.
In case there is no interested buyer to the offer made by SKK Migas, or the price offered by the potential buyer does not meet the price set in the formula, the Minister can assign state-owned or local government-owned company, or private-owned firm with the required capacity as the buyer.
The Minister determines the selling price of the flare gas based on recommendation made by SKK Migas. The selling price for state-owned company is set at a limit of US$0.35 per mmbtu, without price escalation.
Editing by Reiner Simanjuntak