Nine companies have signed a side letter of production sharing contract (PSC) and Letter of Agreement on natural gas price adjustment with a volume of 226.19 billion british thermal unit (BBTUD), said the energy and mineral resources ministry in an official statement - Photo by Pertamina

JAKARTA (TheInsiderStories) – Nine companies have signed a side letter of production sharing contract (PSC) and Letter of Agreement (LoA) on natural gas price adjustment with a volume of 226.19 billion british thermal unit (BBTUD), said the energy and mineral resources ministry (MEMR) in an official statement. Next Friday, state-owned gas operator, PT Perusahaan Gas Negara Tbk (IDX: PGAS), will signed the same agreement with 177 gas consumer companies

On May 20, 14 agreements were signed by four contractors and 11 buyers for the fertilizer, steel and industrial sectors. The agreement based on the ministerial Decree No. 89K/10/MEM/2020 and MEMR No.91K/10/MEM/2020. With the signing, the gas volumes that have been committed to support the implementation of natural gas price adjustments for certain industries and electricity are 564.63 BBTUD.

The nine firms namely PT Pertamina EP, Minarak Brantas Gas Inc., PT Pertamina Hulu Energi NSO, PT Pertamina Hulu Energi Ogan Komering, PT Pertamina Hulu Energi Jambi Merang, PT Pertamina Hulu Energi OSES, Energi Mega Persada Bentu Ltd., Kangean Energi Indonesia, and PT Pertamina Hulu Mahakam. The minister, Arifin Tasrif said on Wednesday (06/03), that the gas price adjustment policy is expected to have a positive impact on the country.

As known, gas is currently prioritized to meet domestic needs. In 2019, gas for the domestic market reached 64.90 percent and is targeted to continue to increase to 68 percent in 2024. The power generation and industrial sectors are the sectors with the largest gas consumption in Indonesia, respectively at 13.66 percent and 26.02 percent.

“The government will always provide full support for the efforts made by SKKMigas (Upstream Oil and Gas Regulatory Special Task Force) and contractors in facing the challenges of increasing national oil and gas production, especially in the context of meeting domestic energy needs,” said the minister.

Its hoped that the steps that have been and will be taken by the agency and the implementation of natural gas price adjustment policies for the industrial and electricity sectors will be realized soon.

“We hope for support from all parties to continue to encourage the implementation of this policy to adjust the price of natural gas in order to create accelerated economic growth and increase the competitiveness of national industries,” adds by Tasrif

At the same day head of SKKMigas, Dwi Soetjipto explained, with the side letter of the PSC, the profit sharing adjustment between his office and producers use a provisional entitlement to the application of natural gas prices determined by the MEMR. Later, the mechanism and procedure for calculating the calculation of the reduction of the part of the country will be contained in the Technical Guidelines which are an inseparable part of the side letter of PSC.

Whereas the LoA is a continuation of a previously signed agreement between the seller and buyer of natural gas. The main points of the agreement stipulated in the LoA include volume, initial price, adjustment price and implementation period.

“By signing this side letter of PSC and LoA, we hope that the PSC Contractors can continue to increase their investment in Indonesia and maintain the national gas production target,” he conclude.

Written by Staff Editor, Email: theinsiderstories@gmail.com