I

ndonesia and a Malaysian gas buyer have agreed to double the price of natural gas sent to Duyong from Natuna Block B, operated by US-based ConocoPhillips, which will boost the government’s revenue by US$1 billion in the 2012 to 2022 period.

The agreement was reached after Indonesian upstream oil and gas regulator BPMigas head Raden Priyono met Malaysian Petronas’ chief executive officer, Dato Shamsul Azhar Abbas, at BPMigas’ office in Jakarta on Tuesday.

The government of Indonesia and Petronas Carigali, a subsidiary of Petronas, agreed to revise the gas price from US$3.1 per million British thermal units (Btu) to $6, BPMigas spokesperson Gde Pradnyana said in a press statement on Wednesday.

Under the gas sales contract, ConocoPhillips will deliver 250 billion Btu of gas per day to Petronas.

Gde reported that the renegotiation process had been completed and an agreement had been made. The next stage, he added, was to legalize the agreement, for which all parties would wait for approval from Energy and Mineral Resources Minister Jero Wacik.

“The agreed price may still be increased if the government considers that the full economic potential of the field has not been reached,” he said.

The government is now intensively renegotiating gas sales contracts. Previously, BPMigas had successfully increased the price of gas sold from the Maleo field in East Java, operated by Santos.

Publicly listed, state gas distributor PT PGN, as the buyer, agreed to raise the price to $5 from $2.2 per million Btu. The volume of the gas is 110 billion Btu per day.

Currently, BPMigas is renegotiating with PGN to increase the price of gas from the Pagar Dewa field in South Sumatra, which is operated by Pertamina EP, and from the Corridor block, also in South Sumatra, operated by ConocoPhillips.

The price for Pagar Dewa is currently pegged at $2.2 per million Btu with the contracted volume of 250 billion Btu per day for a delivery period of 2008 to 2017, while from the Corridor block, PGN buys the gas at $1.85 per million Btu.

The gas price from the Corridor block to Batam is also under renegotiation. The price is $2.4 per million Btu with a total volume of 68.2 billion Btu per day for the period 2008 to 2017.

Gde revealed that the government aimed to raise prices to stand at least at $5 per million Btu.

“The government’s revenue from gas sales may jump by Rp 40 trillion per year if all gas sales contracts are adjusted to these prices,” he said.

In 2011, revenues from the oil and gas sector hit $34.71 billion, jumping from the $26.5 billion gained the year before.

According to BPMigas, as of Feb. 28, the daily average of Indonesia’s gas production was 8,618 billion
Btu per day.