After negotiating a higher natural gas price with Malaysia’s Petronas Carigali, upstream oil and gas regulator BPMigas now wants to triple the rate paid by Indonesia’s state gas distributor.
BPMigas has been working to renegotiate prices with customers to boost revenue as prices for natural gas climb. It has been in talks with a number of consumers, including state-controlled Perusahaan Gas Negara.
PGN buys natural gas at an average price of $1.8 per million British thermal units (mmbtu), but Raden Priyono, BPMigas’s chairman, said on Tuesday that it wanted to raise the rate to $5.5 per mmbtu.
Sri Budi Mayaningsih, corporate secretary at PGN, which is controlled by the State Enterprises Ministry, declined to comment on the negotiations. The contract was signed in the 1990s, according to BPMigas data.
“The upstream companies are not happy with the current price,” and as a regulator, BPMigas is obliged to mediate renegotiations, Priyono said.
Upstream producers in the country include ConocoPhillips, Total E&P Indonesie and state-run Pertamina.
Last month, BPMigas and Petronas Carigali, a subsidiary of Malaysia’s state-owned energy giant, Petronas, agreed to a new rate at close to $6 per mmbtu. That is more than double the previous $2.8 per mmbtu.
Rates for exports are higher than those charged Indonesian utilities and companies.
Pri Agung Rakhmanto, an energy analyst from the Reforminer Institute, said last month’s successful price renegotiation should be used as a starting point for any future renegotiations with other companies.
“It shows that we have the power to set the gas price, so we are not to be underestimated,” he said. “I am happy to hear about this. This is good progress for our country.”
BPMigas also plans to discuss raising the rate in a contract with China National Offshore Oil Corp., which purchases liquefied natural gas from the Tangguh plant in Papua.
The Tangguh contract was signed in 2002 during President Megawati Sukarnoputri’s administration. It set the price at $2.40 per mmbtu for 25 years.
Priyono said that should the renegotiation with PGN prove successful, BPMigas would likely start talks with CNOOC on the Tangguh contract.
“The price [for PGN] will have an impact on the Tangguh LNG renegotiation,” he said. “If the domestic price has been settled, it will be easier to change the price on Tangguh.”
A team was formed in 2008 to renegotiate the Tangguh gas deal but so far no progress has been made. - Jakarta Post
