Fujian LNG contract reconfirmed

The Jakarta Post, Jakarta

China has reconfirmed the awarding of the Fujian liquefied natural gas (LNG) contract to Indonesia, ending speculation that it was reconsidering the contract following the recent visit of a Taiwanese politician to Indonesia.

China's parliamentary speaker Li Peng told Vice President Hamzah Haz during their meeting on Tuesday that the contract reflected China's commitment to continuing energy cooperation with Indonesia.

"Mr. Li Peng explained that the awarding of the Fujian contract reflected China's goodwill regarding continued cooperation (with Indonesia) in the energy sector," Coordinating Minister for Political and Security Affairs Susilo Bambang Yudhoyono said after accompanying Hamzah during the meeting.

China announced last month that it had selected an Australian consortium led by Woodside Petroleum Ltd to be the supplier of LNG to Guangdong province but offered the Fujian LNG contract to an Indonesian consortium led by BP PLC, which had also bid for the Guangdong contract.

In the wake of the announcement, Taiwan's Vice President Annette Lu Hsu-lien visited Indonesia offering a contract to supply LNG to Taiwan. But many considered it a political maneuver rather than a serious business offer.

The visit infuriated China and it was feared that the budding superpower would reconsider its Fujian contract offer.

During the meeting, Bambang said, Hamzah and Li Peng also discussed ways of tackling rampant smuggling, amid suspicions that many Chinese goods were being smuggled into the country.

"Illegal trading and smuggling were discussed because they are detrimental to both sides," Bambang said.

However Yudhoyono said the talks were still at the early stages.

Many local electronics and textile producers have complained about the surge in Chinese-made imports, suspecting that many of the goods, which sell cheaper than locally-made products, have been smuggled into the country.

The Indonesian timber industry has also complained about the smuggling of Indonesian logs into China. The logs have allowed China's timber industry to flourish and even reexport wood products to Indonesia.