Pertamina and Petronas Negotiate Gas Deal

Pertamina may use crude oil prices as the base for pricing natural gas in a new sales deal with Petronas, a Pertamina official said in a statement. Pertamina and Petronas have long negotiated over possible sale of 300 million cubic feet per day of natural gas from south Sumatra fields to Malaysia, for 20 years starting from 2004, but so far the two companies can not agreement on a price. The gas sale discussions resumed in mid-March after being on hold since November. Because of the long delay, Pertamina said it was considering an alternative of shipping the gas through a pipeline and selling it to domestic industries on Java, the country's most populous island. "Pertamina will offer Petronas to use Minas crude and Tapis crude as base price for the gas. The other choice is to use the fuel oil price as the base," the official said. "Currently, we are still continuing talks with Petronas on natural gas sales. We have an improvement in our talks. I hope we can sign (a preliminary) agreement in August," the official said.

Pertamina signed a separate 20-year agreement with Petronas in March last year to supply natural gas from a Conoco operated field in West Natuna, with deliveries expected to start some time this year.