Govt upbeat about China LNG prospects

The Jakarta Post, Jakarta

The government is upbeat to it will seal a contract worth billions of dollars to supply five million tons of liquefied natural gas annually to China's Jiangshu province starting in 2007.

"We hope the sale and purchase agreement can be signed later this year," Minister of Energy and Mineral Resources Poernomo Yusgiantoro told reporters on Monday.

Poernomo said Indonesia might take the LNG supply from the Bontang LNG plant in East Kalimantan.

Rachmat Sudibyo, the head of the upstream oil and gas authority, BP Migas, confirmed that negotiations were ongoing between the agency and the potential buyer, Pacific Oil and Gas Ltd.

One option being discussed is that the buyer could build a new LNG train in Bontang.

If Indonesia secures the deal, it will the country's second contract to supply LNG to China. Last year, Indonesia secured a contract to sell 2.6 million tons of LNG per year to China's Fujian province from 2007.

The gas is to be taken from the country's third LNG plant in the Bird's Head area of Papua province. The plant is being developed by a consortium led by BP Plc. Construction of Tangguh is expected to start next year.

Indonesia is struggling to maintain its position as one of the world's largest LNG producers amid rising competition from other new LNG producers, including Malaysia, Australia and Qatar.

The government, through BP Migas, has been intensifying its effort to seek new markets as far afield as the U.S.

In July, BP Migas signed initial agreements with U.S. buyers such as Sempra Energy and Marathon Oil Corp. to supply around 6 million tons of LNG per year to the U.S.