By Febry Silaban
Upstream oil and gas authority SKK Migas said it has concluded negotiation with Spanish energy firm Repsol SA over price of gas to be produced from the company’s Sakakemang block in South Sumatra.
SKK Migas Chairman Dwi Soetjipto said that the agreed gas price is in line with existing regulations on domestic gas price for certain strategic industries.
“We have made the review, and we also follow the government regulation on domestic gas price, and the IRR (internal rate of return) has been agreed … after discussion with the MEMR. We have submitted the results last week,” Dwi said at a webinar on Thursday held by Petromindo.com, referring to the Ministry of Energy and Mineral Resources.
He did not disclose the agreed Sakakemang gas price. He, however, said that the gas price agreement will pave way for the completion of the Sakakemang block plan of development (POD) within the next few weeks.
Read also: SKK Migas may ask Repsol to carry out full scale PoD for Sakakemang
He said that the POD is expected to be submitted to the Ministry of Energy and Mineral Resources this year for approval. “The POD (will be submitted) this year, we hope within the next one or two weeks,” Dwi said.
Disagreement over price of gas to be produced from the Sakakemang block had been seen as one of the stumbling blocks for the completion of the POD.
Repsol, the block’s operator, initially insisted on a gas price of US$7 per mmbtu, while the government demanded lower price of $5.4 per mmbtu to help ensure a gas price of $6 per mmbtu at the plant’s gate of certain domestic industries as stipulated under existing regulations.
Repsol holds a 45 percent interest in Sakakemang, while Malaysia’s Petronas holds another 45 percent interest, and Mitsui Oil Exploration Co. Ltd holds the remaining 10 percent interest.
Based on the first POD, Repsol is seeking to produce 0.5 tcf of gas from the Sakakemang block through the KBD 2X well.
Editing by Reiner Simanjuntak
