Will Repsol’s US$ 7 per Mmbtu Demand Delay Sakakemang Project?

By Editorial Team 07/08/2020
Summary

Sakakemang Block's development project may face another delay due to the new regulation on industrial gas prices. Repsol SA, the operator of the oil and gas block in Musi Banyuasin, South Sumatra, objected to the US$ 6 per MMBTU ceiling price set by the government. The Upstream Oil and Gas Regulatory Task Force (SKK Migas) revealed that the Spanish oil and gas company believed that Sakakemang Block's gas should be worth more than the US$ 7 per MMbtu.

Repsol aimed for the maximum Internal Rate of Return (IRR). As a result, they demanded a higher price than the limit set by the government. "We are one of many parties to decide whether to continue or not. Repsol's economical price is different from the selling price in Indonesia," SKK Migas' Deputy of Finance and Monetization, Arief Handoko, explained in a virtual discussion on Thursday (8/6). The negotiation between SKK Migas and Repsol is still happening since the task force still wants to accommodate the contractor's wish without having to reduce the state revenue.

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