Medco Reduces Gas Price in Aceh’s Block A

The Energy and Mineral Resources Ministry’s director general for oil and gas, Djoko Siswanto, told the press on Thursday that a deal to reduce the price of gas to US$7.08 per million British thermal units (mmbtu) was reached between local energy firm PT Medco E&P Malaka and Nanggroe Aceh Darussalam-based state fertilizer producer PT Pupuk Iskandar Muda (PIM).

“We have struck a deal to reduce the cost of gas in Block A for PIM by around $2 per mmbtu from $9.45 to $7.08 per mmbtu,” he said adding that the lower-priced gas was set to be transmitted to PIM in Aug. 1.

Djoko further said the deal was the result of bargaining from both parties, which was facilitated by the ministry recently. The deal will be bound by a gas sales and purchase agreement (PJBG) soon.

PT Medco E&P Malaka, which is a subsidiary of oil and gas company PT Medco Energi Internasional, is both contractor and operator of a gas block called Block A in East Aceh that has set its initial gas production at 50 million cubic feet of gas.

As reported by at the end of last year, all gas production in Block A will be transmitted to PIM, which is located in North Aceh and for fueling state-electricity firm PLN’s power plants.

Medco’s contract in Block A started in 2011 and will end in 2031 with a production sharing contract (PSC) program. Block A is estimated to have gas reserves at 120 million cubic feet of gas.