Jambi Governor Hasan Basri Agus urged PetroChina to implement an agreement with Jambi administration-owned oil and gas company PT Jambi Indoguna Internasional (JII) over a gas exploration contract.

“The memorandum of understanding (MoU) was signed several years ago, and it has not been executed yet. It is only a gas sales and purchase agreement (PJBG) we have yet to sign,” he said on Monday.

By signing the PJBG contract, PT JII will receive an allotment of gas management amounting to 14 million cubic feet (mmcf) per day.

JII president director Petrie Ramlie said PetroChina had not yet signed the PJBG contract due to concerns regarding compensation payments on areas used for exploration activities.

PT JII was required to develop a gas reservoir and other production facilities in the gas delivery point in Betara and PetroChina had to develop pipelines from the location of the gas wells to the delivery point.

“The problem is, the gas wells are located in areas belong to PT Wirakarya Sakti (WKS). The development of the pipelines will affect the company’s areas with trees growing on them,” Petrie said.

PetroChina agreed to pay compensations until 2023, but according to PT WKS, it should be paid until 2035.

A recent meeting decided, however, that PetroChina will pay the compensation until 2023 and the remaining will be covered by the upstream oil regulatory body SKK Migas.

“It's likely that the PJBG contract will be signed this week,” said Petrie.