MOSCOW (MRC) -- Indonesia on Tuesday told energy companies to cut natural gas prices for fertilizer, steel and petrochemical industries starting Jan. 1, 2017, in a renewed effort to bring down domestic gas prices, reported Reuters.
Earlier this year, the government had introduced regulations to cut domestic gas prices to help to spur economic growth and improve the competitiveness of domestic industry.
But some contractors have continued to sell natural gas above the price the government had planned for, according to government data.
New rules from the energy ministry published on its official website on Tuesday, require gas contractors like PT Pertamina EP and Kangean Energy Indonesia Ltd, among others, to use new price formulas for contracts with PT Krakatau Steel Tbk, PT Petrokimia Gresik and several fertilizer makers.
Based on the new formulas, gas buyers would only pay around USD6/MMbtu, compared to a range of prices they currently pay of between USD5.73 to USD7.54.
There will be no change for companies with contract terms already below USD6/MMbtu.
Suryaningsih, a senior official at the ministry's directorate general of oil and gas, said the new formulas would mean less revenue for gas producers as well as the government, but "all contractors have agreed."
There were no more details available on how much revenue gas companies and the government could expect to lose.
We remind that, as MRC informed before, in early October 2016, Rosneft and Pertamina signed a JV agreement that serves as the underlying agreement for the creation of a JV company that would implement the construction of the Tuban refining and petrochemical complex located in the eastern part of Java, Indonesia.
The JV agreement specifies the allocation of equity stakes between JV participants (Rosneft - 45%, Pertamina - 55%, respectively), JV management and governance, feedstock, marketing and offtake, funding principles, HR, standard clauses and further steps for implementation.
The parties are currently developing a bankable feasibility study of the project. The final investment decision (FID) on the project will be made upon the results of the bankable feasibility study, basic engineering design and front end engineering design.The design capacity of primary processing at the Tuban complex is 15 MMtpy. It will run on imported medium and heavy grades of sour crude. The project provides for the construction of a large fuel oil catalytic cracker and a petrochemical complex. The complex is assumed to be able to accommodate VLCC supertankers with a deadweight of up to 300 Mt.