Malaysia and Indonesia have hit a deadlock in negotiations for a new price of natural gas from a lucrative block in the Natuna Sea, an official said on Wednesday.
Raden Priyono, chairman of Indonesian upstream oil and gas regulator BPMigas, said Malaysia’s Petronas had refused to more than double the price from $2.80 per million British thermal units (mmbtu) to $6 per mmbtu.
“Currently, we are stuck at $5.50 per mmbtu, but we want a higher price,” Priyono said.
The Indonesian government wanted to raise the price of oil from Natuna’s Block B, operated by an Indonesian subsidiary of US giant ConocoPhillips, as part of wider efforts to make contracts more profitable amid higher global energy prices.
Talks to change the purchasing price on the natural gas contract had been planned since 2009, but no significant progress was made until this year.
Gde Pradnyana, a spokesman for BPMigas, said the deadline for a new price had been set for the second quarter of this year.
Petronas Carigali, a subsidiary of Malaysia’s state-owned energy firm, signed a contract in 2002 to source gas from the block.
Up to 300 million cubic feet of gas from the field is sold each day to Malaysia and delivered to Petronas’s Duyong offshore gas facility at $2.80 per mmbtu.
ConocoPhillips currently holds a 40 percent stake in Block B, while Japan’s Inpex holds a 35 percent stake. The remaining shares are held by Chevron.
Indonesia generally takes 80 percent of the gas that is sold from blocks such as Natuna through a production-sharing contract with the gas producers.
Calls for the government to renegotiate contracts with foreign buyers had gained momentum last month when President Susilo Bambang Yudhoyono called for a review of deals with foreign companies.
The president claimed the nation’s robust economy would give it more bargaining power.
Among other sales contracts under review by state regulators is China National Offshore Oil Corporation’s liquefied natural gas export deal with the Tangguh plant in Papua.
The contract was signed in 2002 during President Megawati Sukarnoputri’s administration, which set gas prices at the block at $2.40 per mmbtu for 25 years. - http://www.thejakartaglobe.com
