TheJakartaPost

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

New rule may provide leeway for gas exports

The government has issued a new regulation on gas exports that may provide leeway for gas producers to avoid its legal obligation to earmark 25 percent of gas to domestic consumers

Alfian (The Jakarta Post)
JAKARTA
Thu, September 17, 2009

Share This Article

Change Size

New rule may provide leeway for gas exports

T

he government has issued a new regulation on gas exports that may provide leeway for gas producers to avoid its legal obligation to earmark 25 percent of gas to domestic consumers.

The regulation, PP No. 55/2009, article 49 point 5, stipulates that if producers fail to reach a deal with domestic buyers, they can sell gas on the international market, pending approval from the energy and mineral resources minister.

Evita H. Legowo, director general for oil and gas, said the regulation was part of an overall adjustment to the existing oil and gas law, which was recently revised by the Constitutional Court.

“There is nothing new in the regulation except for the erasure of the word ‘at least’ prior to the 25 percent domestic market obligation,”

Evita said. She however misquoted Article 46, point 3 of the regulation, which in fact says “up to”.

Her statement was inconsistent with the new regulation, which will see the scrapping of at least
two points in Article 46 and adds two new points to Article 48, including the above provision on gas exports.

The government regulation was enacted on Sept. 1 after heated debate on the sale of gas from gas fields located in Donggi, Central Sulawesi, which involved a tug of war between top government executives, including vice president Jusuf Kalla.

Kalla said all gas from the Senoro and Matindok fields in Donggi was to be allocated for domestic consumption so as to supporting domestic petrochemical companies.

The Matindok field is fully owned by state oil company Pertamina, while the Senoro field is equally owned by Pertamina and Medco, who formed a joint venture with Japan’s Mitsubishi Corporation to build and operate an LNG plant, to process the gas from the two fields.

Pertamina holds a 29 percent participating stake in the venture, Medco holds 20 percent and Mitsubishi holds a controlling 51 percent share. The output of LNG from the plant was initially entirely allocated for exports.

The progress of the joint venture company has been disrupted after the vice president’s statement.

When asked whether the new regulation would mean that the joint venture could now continue with their initial plan, Evita could not confirm.

“It’s not necessarily like that. We are still discussing the matter now,” she said.

As reported earlier, the government, via the ministry’s office, has demanded Pertamina and Medco find domestic buyers for gas from the Senoro and Matindok fields.

Project director at Medco, Lukman Mahfoedz, told The Jakarta Post that the two companies had met with potential buyers but yet to secure any deals.

“There has been no progress yet. We are still waiting for the government’s final decision on a comparison between existing gas contract signed with PT Donggi Senoro LNG and the proposal from the domestic buyers,” Lukman said.

{

Your Opinion Matters

Share your experiences, suggestions, and any issues you've encountered on The Jakarta Post. We're here to listen.

Enter at least 30 characters
0 / 30

Thank You

Thank you for sharing your thoughts. We appreciate your feedback.