Indonesia gears up to fulfill Fujian LNG supply contract
Indonesia gears up to fulfill Fujian LNG supply contract
A'an Suryana, The Jakarta Post, Jakarta
The government said it would immediately send a task force to
China to further discuss the liquefied natural gas (LNG) supply
contract awarded by the Chinese government late on Wednesday.
"The task force was established on Thursday," Minister of
Energy and Mineral Resources Purnomo Yusgiantoro told reporters
at a media conference at his office.
China awarded Indonesia a contract to supply 2.5 million
metric tons of LNG per year to Fujian province, after Indonesia
failed to win a hotly contested deal to supply the commodity to
Guangdong province. This deal was won by an Australian
consortium, Australian LNG, led by Australian energy giant
Woodside Petroleum Ltd., which will supply some 3 million metric
tons of LNG per year over a 25-year period.
The LNG for Fujian will come from the Tangguh LNG project in
Papua province, Indonesia, operated by Anglo-American energy
giant BP Plc. LNG supply to Fujian is scheduled to commence in
2006.
The potential revenue to be received by BP and the Indonesian
government from the LNG sale to China remains unclear, as details
of the supply contract are not yet available.
"We welcome the Chinese government's decision and we have
established a team to immediately put the contract into effect.
The team comprises officials from the Ministry of Energy and
Mineral Resources, the implementation body of the upstream oil
and gas sector (Balak), state oil and gas firm Pertamina and BP
Indonesia," Purnomo said.
He said that the team had been tasked to discuss and negotiate
terms for the Fujian LNG supply contract.
Reports said earlier that the Tangguh project had been chosen
as the LNG supplier for Fujian on condition that BP adhered to
the terms promised when it bid for the Guandong project.
BP initially bid for the Guangdong LNG supply contract,
competing with five other bidders.
As competition between Indonesian and Australia heated up,
leaders of both countries took turns to visit China in a bid to
win over the Chinese government.
Purnomo dismissed suggestions that the Fujian contract was not
economically viable for the Tangguh project as the contracted
volume was only 2.5 million metric tons per year, compared with
Tangguh's projected annual output of 3 million to 4 million
metric tons.
"China is not the only market for Indonesia," said Purnomo.
Indonesia's traditional LNG markets were Japan, South Korea
and Taiwan, while China was listed as a new emerging market.
What Indonesia should learn from the Guangdong case was that
Indonesia should be more proactive in exploring LNG markets, and
be more efficient in its LNG production, Purnomo said.
"Indonesia is seeking opportunities to sell LNG to the
Philippines and the U.S.," said president of Pertamina Baihaki
Hakim at the same media conference.
Pertamina is still in negotiation with a Philippine company
for the sale of 1.3 million metric tons of LNG per year.
BP is expected to start development of the Tangguh project in
2003 and complete it in 2005.
Indonesia is estimated to possess 100 trillion cubic feet in
LNG reserves, one of the largest in the world.