Jakarta, Bisnis Indonesia – The Indonesian Petroleum Association (IPA) called for revision of gas allocation approval system as in application it takes long time.
Chairman of the Board of Directors of the Indonesian Petroleum Association (IPA) Lukman Mafoedz said that the gas allocation system needs a number of approvals from various parties such as from the SKK Migas , the country’s oil and gas regulator and the director general of oil and gas at the Ministry of Energy and Mineral Resources.
“Even there have been longer time for revisions sometimes in case of changing situation related to commercial matters,” he said on Wednesday, December 17, 2014.
In addition, approvals are long to get and those getting gas allocation have not gone immediately in action for further process.
This has caused companies which have discovered gas allocation cannot directly sell its gas as they must wait gas purchasing deals from buyers , he said.
“The gas allocation should be removed and leave it to the market mechanism based on a business-to-business scheme,” he said in an interview with Bisnis Indonesia.
Under such market mechanism, he said, producers or production sharing contractors (PSCs) can seek reliable buyers who have strong buying commitment.
Under the scheme, there will be no impacts for the electricity sector, he said in the interview.
He said the state utility company PT Perusahaan Listrik Negara (PLN) is a priority of gas sellers as the state utility company so far buys gas in good prices and smooth payment.
Under the mechanism, the government can remain in a good control over gas prices as there have been gas sales agreements (GSA) to be approved by the government, too.
Can Be Monetized
He was of the view that the simplification of the allocation system will help the domestic industry in more competitiveness so that gas which has been discovered can be monetized soon.
“Contractors can soon get return of investment in handling gas projects,” he said in the interview.
Meanwhile, separately acting secretary general of oil and gas at the Ministry of Energy and Mineral Resources (ESDM), Naryanto Wagimin, said that the gas allocation system is already under the ESDM Ministerial Regulation (Permen) ESDM No 03/2010 on the allocation and the Utilization of Gas for the Domestic Need.
“The allocation of gas is for fertilizer and electricity production cannot be based on the market scheme or based on business-to-business scheme,” he said recently.
He said the government remains in a commitment that production sharing contractors to comply with the ESDM Ministerial Regulation, adding that the market scheme is okay to be applied for other sectors outside the fertilizer and electricity sectors by considering the condition of the state revenue.
In the Chapter 6, article 3 of the ESDM Ministerial Regulation No 03 of 2010, it is stated that the allocation and the utilization of gas is based on priorities such as to increase the production of oil and gas and second is to improve the development of the fertilizer production, and third is for the electricity sector and industrial sector in general.