T

he Energy and Mineral Resources Ministry has approved a 50 percent increase in gas prices for industry, lower than the 55 percent proposed by state gas distributor PT Perusahaan Gas Negara (PGN).

The ministry’s director general for oil and gas, Evita Herawati Legowo, said in Jakarta on Friday that the increase in gas prices was approved by Energy and Mineral Resources Minister Jero Wacik.

Evita said that the increase would be implemented in two stages, beginning with a 35 percent increase on Sept. 1, followed by a 15 percent increase on April 3.

“The minister has signed the decree on the price increase,” Evita told reporters at the ministry.

In May, state-owned electricity company PLN proposed increasing gas prices for the company’s industrial customers in West Java by 55 percent to US$10.13 per million British thermal unit (Btu), following an increase in the price it had to pay for gas from ConocoPhillips and Pertamina EP.

As reported earlier, prices for gas from the Grissik field in the Corridor bloc in South Sumatra operated by US-based ConocoPhillips increased by almost 200 percent to $5.60 per million Btu from $1.85 million Btu. The price will further increase to $6.50 per million Btu in 2014.

Meanwhile, the price of gas from the Pagardewa field in South Sumatra operated by Pertamina EP has increased to $5.50 per Btu, up 150 percent from $2.20 per million Btu.

As with the gas supply contract from Grissik, the price for gas from Pagardewa will also increase, to $6 per million Btu and one year earlier.

Gas from the fields is channeled to PGN’s customers in West Java through the South Sumatra–West Java pipeline.

The increase in gas prices proposed by PGN sparked protest from industrial users, prompting the Energy and Mineral Resources Ministry to postpone implementation of its plans.

The ministry also delayed implementing agreements stipulating a new price for PGN to pay Conoco and Pertamina EP for gas. The revised prices have not been announced.

PGN president director Hendi Priyo Santoso confirmed that the Energy and Mineral Resources Ministry had signed a decree on the price increase, although he could not confirm whether it would take effect on Saturday.

Separately, the secretary-general of the Forum of Gas-Using Industries (FIPGB), Achmad Widjaya, said that the increase in gas prices would not bother industrial users.

“What is most important for us is that the government ensures that we have a sufficient gas supply,” Achmad added.

“It will be useless to increase the price of gas if the supply is not available.”

Achmad said the FIPGB had not received a clear response from the government on its proposal to increase the gas supply allotted for purchase by industrial buyers.

“When we asked [the government], they always shifted responsibility among one another,” Achmad said over the telephone.

“The Energy and Mineral Resources Ministry said that [upstream oil and gas regulator] BPMigas should set the gas supply quota, and then BPMigas said it should be the ministry’s directorate general, and vice versa,” Achmad said.

PGN currently operates 5,800 kilometers of transmission and distribution pipelines across Indonesia, dominating around 90 percent of the gas infrastructure in the country.