15 June 2007
DPR Asked to Evaluate Tangguh Gas Price
The House of representatives (DPR) has been asked to form a special team to investigate the liquefied natural gas (LNG) sales contract from Tangguh gas field in Papua.
The price of Tangguh gas overseas is regarded as cheaper compared to that of domestic gas sales.
Effendi Situmorang, an oil industry observer, said that the team was aimed at researching and probing the contract and sales price of Tangguh gas.
The special team, he said, comprises DPR members, government officials and the
Supreme Audit Agency (BPK).
“The purpose of forming the team is to take responsibility as regards whether the 20-year gas sales contract will result in benefit or loss for the state,” he told Tempo yesterday (13/6).
According to Effendi, the Tangguh gas sales price, US$3.5 per mmBtu on average, is the lowest price in the history of Indonesia's LNG sales.
“LNG price from Tangguh is lower than gas price in domestic market, which is above US$4 per mmBtu on average,” said the former Pertamina's Director of Production Sharing Management (now the Upstream Oil and Gas Executing Body or BPH Migas).
He explained that now the State Electricity Company's (PLN) power plants buy gas at prices above US$4 per mmBtu on average.
Moreover, Tangguh gas sales price can cause price discrimination in LNG from Arun gas field in Aceh and Badak gas field in East Kalimantan.
“Up to now Japan buys LNG from Indonesia at between US$7 and US$8 per mmBtu on average,” said Effendi.
Purnomo Yusgiantoro, Energy and Mineral Resources Minister, disagreed that Tangguh gas sales price was too cheap.
His reason was that the US$3.5 per mmBtu price is the export price (free on board).
“When the goods reach the destination, the price can reach US$7 to US$9,” he told Nieke Indrietta from Tempo.
Purnomo went on to say that around 50 percent of Tangguh's LNG for Sempra is also transferred to other contract to gain a better price.
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sourceLabels: Indonesia, Internet News, Money
My mind's unweaving/ 11:17 AM
