Gas Sales Agreement Template for Indonesia
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What is a Gas Sales Agreement?
A Gas Sales Agreement is a fundamental document in Indonesia's energy sector, used when establishing a contractual relationship between a gas supplier and buyer. The agreement must comply with Indonesia's regulatory framework, particularly Law No. 22/2001 and associated regulations, while addressing commercial, technical, and operational aspects of gas supply. It is typically used for long-term gas supply arrangements and must incorporate specific Indonesian requirements including local content provisions, government approval processes through SKK Migas, and regulated pricing mechanisms. The document becomes necessary when companies need to establish secure, long-term gas supply arrangements for industrial use, power generation, or other commercial purposes, and must address both the commercial framework and technical requirements for gas delivery.
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About the Gas Sales Agreement
A Gas Sales Agreement is a comprehensive commercial contract that governs the sale and purchase of natural gas in Indonesia. This document establishes the legal framework between gas suppliers and buyers, ensuring compliance with Indonesia's complex regulatory environment while addressing the commercial, technical, and operational aspects of gas transactions. The agreement must incorporate specific Indonesian legal requirements and regulatory approvals to be enforceable.
When do you need this document?
You need a Gas Sales Agreement when entering into any commercial gas supply arrangement in Indonesia. This includes establishing gas supply contracts for industrial facilities, power generation plants, petrochemical operations, or manufacturing facilities requiring natural gas as feedstock or fuel. The document is essential when securing long-term gas supply arrangements, particularly for projects requiring substantial capital investment and predictable energy costs. You'll also need this agreement when transitioning from short-term spot purchases to longer-term supply contracts, or when renegotiating existing gas supply terms to comply with updated regulations.
Key legal considerations
Your Gas Sales Agreement must address several critical legal provisions to ensure enforceability and compliance. The Daily Contract Quantity (DCQ) and Take-or-Pay provisions form the commercial foundation, establishing minimum purchase obligations and payment terms regardless of actual gas consumption. Force majeure clauses must be carefully drafted to address Indonesia-specific risks including natural disasters, regulatory changes, and infrastructure limitations. Gas quality specifications and delivery points require precise technical definitions to avoid disputes. Pricing mechanisms must comply with government regulations while providing commercial flexibility. The agreement should include comprehensive default and termination provisions, addressing both commercial defaults and regulatory compliance failures.
Legal requirements in Indonesia
Your agreement must comply with Law No. 22/2001 on Oil and Gas as the primary regulatory framework governing gas transactions in Indonesia. Government Regulation No. 67/2002 on Natural Gas Trading establishes specific requirements for gas trading activities, including mandatory reporting and pricing compliance. You must incorporate Minister of Energy and Mineral Resources Regulation No. 58/2017 requirements for gas price setting and approval mechanisms. The contract requires approval from SKK Migas (Special Task Force for Upstream Oil and Gas Business Activities) for upstream gas sales. Local content provisions must be included to comply with domestic component requirements. The agreement must address foreign exchange regulations under Bank Indonesia rules, particularly for international transactions. Environmental compliance clauses should reference relevant environmental laws and permitting requirements. Finally, the contract must comply with Indonesian Civil Code principles for contract formation and enforcement while addressing specific energy sector regulations.
GOVERNING LAW
Applicable law
This Gas Sales Agreement is drafted to comply with Indonesia law. Key legislation includes:
Government Regulation No. 67/2002: Regulation on Natural Gas Trading - Specific rules governing the trading of natural gas, including pricing mechanisms and distribution requirements
Minister of Energy and Mineral Resources Regulation No. 58/2017: Gas Price Setting Regulation - Provides framework for determining gas prices and pricing mechanisms
Indonesian Civil Code (KUHPer): Basic contract law principles governing formation and enforcement of commercial agreements in Indonesia
Government Regulation No. 36/2004: Downstream Oil and Gas Business Activities - Regulates downstream activities including gas trading and distribution
Law No. 25/2007: Investment Law - Governs foreign investment aspects in energy sector contracts
Government Regulation No. 79/2014: National Energy Policy - Framework for energy security and management, affecting gas supply and distribution
Minister of Energy and Mineral Resources Regulation No. 6/2016: Gas Distribution and Pricing for Specific Industries - Regulates gas allocation and pricing for industrial users
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