China Ready to Rise Gas Buying Prices
The plan will be proposed in the coming contract renegotiation.
VIVAnews – Coordinating Minister for the Economy, Hatta Rajasa, said the Chinese government is willing to rocket gas prices attached in the purchase agreement from Tangguh Field, Papua. The plan will be proposed in the coming contract renegotiation.
The government, according to him, has prepared a low-cost contract renegotiation team which will be chaired by the Coordinating Minister for the Economy.
The future renegotiation, he said, will discuss the adjustment in prices so as to shape up with the reasonable formula. Until now, the LNG contract is offered at lower prices compared to the international market.
Earlier, the government managed in pushing state revenue from the natural gas sector by increasing the domestic gas price. The government believed the contract revision will help boost additional income by US$7.5 billion.
For example, the gas price from Grissik Field, Block Corridor, with the operator ConocoPhillips, supplied to PT Perusahaan Gas Negara Tbk (PGN), has increased from US$1.85 per million British thermal unit (mmBtu) to US$5.6 per mmBtu. The contract stated that the price will continue increase by up to US$6.5 per mmBtu in 2014.
Similarly, the gas contract between Pertamina EP South Sumatera Region to PGN has increased from US$2.2 per mmBtu to US$5.5 per mmBtu. This price will keep on rising to US$6 per mmBtu in 2013.
As a result, PGN also raises gas selling prices, especially in West Java, DKI Jakarta, and Banten.
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