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Oil and gas producer PT Medco Energi is expecting revenue to fall this year after oil prices dropped from historic highs in 2008, a company director said.

“Our revenue will be down as the average oil price will be below last year, and some of our assets have and will be sold this year, such as Apexindo, and seven oil blocks,” Darmoyo Doyoatmojo said on Tuesday.

Medco is also still in talks with the government over how much fuel from the Donggi-Senoro gas field in Southwest Sulawesi would be reserved for domestic use.

Last year, the company booked $1.286 billion in net revenue, an 19 percent increase over 2007. The company had $280.2 million in net profit in 2008, a 421 percent increase from $6.5 million in the year prior.

The company is issuing a cash dividend of $50 million, or 1.5 cents per share, which was 17.8 percent of last year’s net profit. The company did not offer a dividend in 2008 due to drop in net profit from 2007.

Medco said the two Japanese utilities who had agreed to buy gas from Donggi-Senoro had given the company and consortium partner PT Pertamina more time to continue negotiations with the Indonesian government.

Vice President Jusuf Kalla has been demanding that all the Donggi-Senoro gas be reserved for domestic use as demand for the fuel increases.

Lukman Mahfoedz, a Medco director, said on Tuesday that Donggi-Senoro must go ahead according to schedule, with the project due to start in 2012. Lukman said that if the project were delayed, the buyers might find another source of fuel.

The consortium, which consists of Medco, Pertamina and Japan’s Mitsubishi, had offered to allocate 70 million cubic feet per day of Donggi-Senoro’s output for domestic use, while “we hope to export about 335 mmcfd.”

Lukman said the price of Donggi-Senoro unprocessed gas for the Japanese buyers had been set at $6.2 per million British thermal units, while the LNG price was at $10.9 per mmbtu.

“It’s higher than market price, with the spot gas price around $5 [per mmbtu] currently,” he said.

Medco shares fell 8.2 percent to Rp 2,750 on Tuesday.