Indonesia's state-owned gas transmission and distribution company Perusahaan Gas Negara has agreed to more than double the price it pays for gas from the Indonesian gas fields of Australia's Santos, a senior official from Indonesia's upstream regulator said late Tuesday.
"We expect that this [amended gas sales] agreement to be followed by other contracts where prices are still below $3/MMBtu. The increasing of the domestic gas price will boost the state's revenue, the communication division head of Indonesia's upstream regulator BPMigas, Gde Pradnyana, said in a statement.
Under the amended contract, PGN will buy Santos gas at $5/MMBtu with a clause that allows for the raising of prices by 3% annually, compared with $2.14/MMBtu previously.
Santos has been supplying 110 billion Btu/day from its Maleo gas field in Indonesia's East Java since 2006 under a 12-year contract, Pradnyana said.
Indonesian Vice President Boediono said last year that the government would gradually increase domestic gas price in a bid to boost investment in the sector and attract investors to sell gas production domestically rather than export it.
Separately, BPMigas has said that the country should set domestic gas prices at levels which give fair return to upstream investors.
In a related development, Indonesia's House Commission VII on energy and mining has also urged the government to raise domestic natural gas prices to make them more competitive with what companies can get for LNG exports.
