The government expects to book additional state revenue of about US$74 million a year from the change in a crude oil-to-gas swap agreement between two energy giants Chevron Pacific Indonesia and ConocoPhillips.
The government will receive the revenue from additional production stipulated by the revised swap arrangement signed Monday by energy giants Chevron Pacific Indonesia and ConocoPhillips, said R. Priyono, chairman of BPMigas, the upstream oil and gas regulatory agency.
Under the original swap agreement, as much as 50,000 barrels of crude oil per day (bpd) from Chevron's Duri field in Riau were exchanged for around 375 billion British thermal units of gas per day (BBTUD) from ConocoPhillips' Grissik gas field in southern Sumatra. Chevron injected the gas into the Duri field to enhance oil recovery.
The swap agreement drew strong criticism from legislators after the swapped oil was not included in the country's oil and gas production figures. The government asked the companies to convert the swap agreement to a normal gas-sales agreement last year.
Under the new agreement, Chevron will buy ConocoPhillips' gas under a normal gas-sales-and-purchasing agreement. With the change, beginning Aug. 1, the 50,000 bpd of oil previously swapped to ConocoPhilllips' gas will be added to Chevron's crude oil production. It means that the government will receive a bigger share from the company's oil production beginning this year.
The new agreement stipulates that ConocoPhillips will sell gas to Chevron under two supply contracts. In the first contract, it will supply Chevron between 25.4 to 203.8 BBTUD for four years. In the second contract, ConocoPhillips will supply between 80 to 171.3 BBTUD for 12 years.
"The agreement will secure a long-term gas supply, which is very critical for Chevron's operations," Priyono said.
The final amount of the estimated $74-million revenue increase will depend on the actual sales price of the Duri crude oil, he added.
ConocoPhillips and PT Perusahaan Gas Negara (PGN) also signed a gas-sales contract Monday. ConocoPhillips agreed to supply PGN, the state gas distributor, with 12.5 BBTUD of gas over the next five years.
In a third gas-sales agreement signed on Monday, PT Pertamina EP agreed to supply as much as 22 BBTUD of gas to Pertamina Gas, its sister company, which will use the gas at its liquefied petroleum gas (LPG) plant in South Sumatera.
"The plant is expected to start operation in 2012," Pertamina EP's spokesman Mochamad Harun said.
Priyono said the contracts would create big economic benefits. "The gas is allocated for industrial use and LPG production. This will have a wider, multiplier effects," he added.
BPMigas' deputy for operations Budi Indianto said that the company's LNG plant in Bontang, East Kalimantan, would produce 24 to 26 excess LNG cargoes by 2011.
BPMigas might sell the excess LNG on the spot market, but would first try to finish construction of several new domestic LNG terminals, he added.
Stae oil and gas company PT Pertamina and PGN are building several LNG terminals in anticipation of increasing domestic demands for gas. Budi said the terminals must be finished by July 2011 to receive excess LNG. "Otherwise we will sell LNG on the spot market," he said.
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