Gas Cartel Difficult to Realize
Monday, 12 February, 2007 | 16:54 WIB

TEMPO Interactive, Jakarta: The establishment of a gas producing countries’ organization is considered to be difficult to realize.

The reason for this, according to Ramses Octavianus Hutapea, an oil and gas observer, Indonesia’s gas character is different from that of other gas producing countries.

“If we (Indonesia) join such association, later it will be difficult to implement,” said Ramses when contacted in Jakarta yesterday.

He explained that if the organization was founded and it decided on pricing policy among members country, this will create problems for Indonesia.

Ramses explained that in Indonesia, gas does not come out from the earth together with oil.

Therefore, the investment, production costs and prices will be different from those of other gas producing counties including Russia and Saudi Arabia.

In these two countries, gas comes out from the earth together with crude oil so the cost is lower compared to Indonesia, thus meaning the gas sales price is cheaper than Indonesia.

This character difference is what makes Indonesia have a different gas price setting formula.

Purnomo Yusgiantoro, Energy and Mineral Resources Minister, said he could not comment on a gas cartel yet.

“Whose idea is that? What is it like? I haven’t heard of it. I knew it from the media,” said Purnomo when contacted on Friday (9/2).

According to him, his department must first know the form, intention and purpose of the gas cartel considering that Indonesia’s gas producers regularly hold informal meetings.

“But it’s non-binding. It’s only information exchange,” he said.

Ramses explained that the characteristics of gas are different from oil, which can be stored and sold directly, whereas gas must be sold through pipes.

Thus, piping must be laid in order to channel gas to buyers.

The other alternative is for gas to be sold in the form of liquefied natural gas (LNG), so LNG terminals must be built.

Nieke Indrietta