P

ertamina Hulu Energi (PHE) says it is in talks with Malaysia’s Petroliam Nasional (Petronas) and Petro Vietnam Exploration and Production (PVEP) to raise the price of natural gas from its oil and gas block in Malaysia.

PHE, a subsidiary of state-run oil and gas firm PT Pertamina, started the talks after it realized its concession for the SK-305 block also contained natural gas that it could not sell at what it thought was a good price.

PHE president director Salis S. Aprilian said on Thursday that Pertamina and PVEP agreed to negotiate a gas price that was more economic and competitive.

Salis said Pertamina sold its natural gas to Petronas for US$1 per 1 million British thermal unit (mmbtu), while the average sales price in Malaysia was US$5 to $6 per mmbtu.

He said all parties agreed to the new price.

“We expect to raise it to around $3.80 to $5 per mmbtu. I guess we would not raise it over $6, Salis said.

Salis expected that the negotiations would be complete later this month.

The SK-305 block currently produces 22 million standard cubic feet of gas per day (mmscfd) and 2,000 barrels of oil per day (bpd) and has estimated reserves of 120 billion mmscfd of gas and 12 million bpd of oil.

Pertamina owns a 30 percent stake of the SK-305 block, while Petronas owns 40 percent and PVEP owns the remaining 30 percent.

Pertamina spokesperson Ali Mundakir told reporters that the negotiations had been proceeding positively.

“I think the negotiations will be complete soon if there is an understanding with our Malaysian counterparts,” he said.

PHE currently owns shares in nine oil and gas blocks in seven countries.

Besides the SK-305 block in Malaysia, it also owns the VIC block in Australia, Block 3WD in Iraq, Block 3 in Qatar, Block 13 in Sudan, Block 17-3 and Block 123-3 in Libya and Blocks 10 and 11.1 in Vietnam.

Out of nine blocks, the company has begun production only the ones in Malaysia and in Australia.

In Iraq and Libya, exploration activities have been stalled due to security considerations following the recent political upheavals in the nations.

Pertamina said last month that its acquisition of overseas blocks would increase its production to 91,000 bpd of oil, up 46.8 percent over current production of 62,000 bpd.

The firm canceled plans last year to acquire a 25 percent stake worth $3.5 billion in Block 31 in Angola.