Malaysia's state-owned oil company Petronas was willing to increase the price of gas it buys from Natuna block B by more than 100% to $6/MMBtu, Indonesian upstream regulator BPMigas' communication head, Gde Pradnyana, said Wednesday.
But the deal still needs to be approved by Indonesia's energy and mines minister, Darwin Zahedy Saleh, he added.
"We have reached a deal with Petronas to increase the gas price. Petronas is willing to pay more than $6/MMBtu for the gas," Pradnyana said.
Petronas did not reply to an email on whether it had agreed to the gas price hike.
Negotiations between Malaysia and Indonesia on a higher price for gas from the offshore Natuna block B operated by ConocoPhillips has been going on since 2009.
ConocoPhillips started to deliver gas from Natuna's block B to Petronas in 2002 under a 20-year contract. The first delivery through a pipeline started at 38.5 billion Btu/day and was ramped up to 209 billion Btu/d by 2009. BPMigas put the current volume of gas delivered to Petronas at 250 billion-270 billion Btu/d.
The gas was being sold at $2.8/MMBtu, based on a formula using Singapore high sulfur fuel oil prices.
Indonesia has been increasingly seeing a debate on gas sales to domestic consumers versus exports. Producers prefer to export gas as domestic buyers pay between $1.20/MMBtu and $6/MMBtu, while export prices can reach $12-13/MMBtu.
The parliament's Commission VII on Energy and Mining has urged the government to raise domestic natural gas prices to persuade producers to sell more of the product at home.
