Minister of EMR Appreciates the Signing of Gas Sales Agreement Part 3

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 232.Pers/04/SJI/2020

Date: 30 July 2020

Minister of EMR Appreciates the Signing of Gas Sales Agreement Part 3

Minister of Energy and Mineral Resources (EMR) Arifin Tasrif again witnessed the signing of Side Letter of PSC and Letter of Agreement (LoA) between natural gas sellers and buyers.

Minister Arifin said as many as 16 Side Letter of PSC and 38 LoA documents have been signed, with 25 LoA signed to implement EMR Ministerial Decision Number 89K/10/MEM/2020 (including 1 amended Gas Sales Agreement, GSA) and 13 LoA to implement EMR Ministerial Decision Number 91K/10/MEM/2020.

"Today we witnessed the signing of 7 Side Letter of PSC and 21 agreements between gas sellers and buyers, namely 12 LoA, 1 amended GSA, and 8 Side Letter Agreement, with a total gas volume of 1,315.8 BBTUD," said Minister Arifin in Jakarta on Thursday (30/7).

PSC Contractors signing the Side Letter of PSC include: (1) ConocoPhillips (Grissik) Ltd., Talisman (Corridor) Limited, PT PHE Corridor; (2) PearlOil (Sebuku) Ltd., Total E&P Sebuku, Inpex South Makassar Ltd.; (3) BP Berau Ltd.; (4) BP Wiriagar Ltd.; (5) BP Muturi Holdings B.V.; (6) Husky-CNOOC Madura Ltd.; (7) PT PHE West Madura Offshore, Kodeco Energy Co Ltd., PT Mandiri Madura Barat.

"Ministry of EMR would like to express its highest appreciation to the executives of PSC Contractors, the executives of natural gas trading businesses, PLN, and the natural gas user industry who have extended their support to the natural gas price adjustment policy for the industry sector, and particularly to PSC Contractors who signed the Side Letter of PSC today," continued Minister Arifin. "We'd also like to express our appreciation to PSC Contractors and natural gas users for the signing of Letter of Agreement between natural gas sellers and buyers," said Minister Arifin.

The government, continued Minister of EMR, will continue to fully support any efforts made by SKK Migas and PSC Contractors in dealing with the challenge of increasing the national oil and gas production, especially in order to meet domestic demand for energy.

"We hope through the efforts that have been and will be made by SKK Migas, the implementation of the natural gas price adjustment policy for the industry and electricity sectors will soon be realized," Minister Arifin concluded.

Certain industries that use natural gas can enjoy price adjustment to USD6 per MMBTU; these industries include fertilizer, petrochemical, oleochemical, steel, ceramics, glass, and rubber gloves industries.

Although the agreement between gas sellers and buyers were made in July, oleochemical companies are guaranteed to get gas at USD6 per Million British Thermal Units (MMBTU) since 13 April 2020.

The slash in the gas price has been enjoyed by PT PGN customers, one of which is a rubber gloves mold producer in Medan. The company has been allocated gas at USD6, according to EMR Ministerial Decision Number 89/2020, for 0.35 BBTUD. The profit margin for the second quarter was up by 14.65% due to rising orders as well as an effect of gas price slash.

The gas price adjustment policy is expected to give positive effects to the country, for example by increasing tax and dividends from the industry sector, reducing government spending on fertilizer and electricity subsidies, and creating employment.

Meanwhile, special for the industry sector, a competitive gas price is expected to improve industrial competitiveness, increase production capacity and investment, and absorb additional work force that will indirectly improve Indonesia's investment climate.

The government has continued to make its best efforts in developing gas supply to meet the ever increasing domestic demands while ensuring that upstream activities remain attractive to investors. (IY)

Head of Bureau of Communication, Public Information Services, and Cooperation

Agung Pribadi (08112213555)

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