Indonesia optimistic to win China's LNG tender
Indonesia optimistic to win China's LNG tender
JAKARTA (JP): Indonesia will participate in a tender to supply
China with 3 million tons of liquefied natural gas (LNG) from the
Tangguh gas field in Irian Jaya, a senior government official has
said.
The director general for oil and natural gas at the Ministry
of Mines and Energy, Rachmat Sudibyo, said Indonesia would
compete along with Malaysia, Australia and Qatar in the LNG
tender, which he expects to take place in August.
"The Chinese government told us that they are currently
preparing the tender documents, which they will have completed
very soon, probably by next month," Rachmat told The Jakarta Post
over the weekend.
Indonesia has long been lobbying China in a bid to find a
market for the six million tons of gas the Tangguh project is
estimated to produce annually.
Construction of the Tangguh project, worth US$1.5 billion, is
pending the signing of a contract, which Indonesia is expecting
to happen some time this year.
"We have a good chance of winning the tender," Rachmat said,
adding that LNG buyers usually sign long-term contracts of 20
years.
He said Indonesia is known as the world's largest LNG
exporter with a good track record for reliability.
Indonesia's LNG is also more competitive in price, because
compared to its competitor, the country enjoys a shorter distance
for transporting gas to China, he added.
Although no agreement has been reached between China and
state-owned oil and gas company Pertamina, President Abdurrahman
Wahid said on Friday that Indonesia would sell its Tangguh LNG to
China.
He also said Indonesia would sell some LNG products from its
East Kalimantan-based Bontang LNG plant to India.
President Abdurrahman said Chinese and Indian companies
interested in buying Indonesian LNG, were asked to contact
Pertamina and its partners.
The President made no explanations on his forecast, but his
statement came while Minister of Mines and Energy Susilo Bambang
Yudhoyono was returning from lobbying the Chinese government to
choose the Indonesian LNG offer.
The minister went to China last week to market LNG from the
Tangguh gas fields.
Rachmat, who accompanied Bambang during the visit, said the
minister met with senior Chinese government officials and
explained to them the potential of the Tangguh project.
"We told them (China) our position as an LNG exporter and how
we can meet their demands for LNG," he said.
The Indonesian delegation also included Pertamina president
Baihaki Hakim and president of oil and gas company BP Amoco
Indonesia Bill Schrader, whose company is Pertamina's production-
sharing partner in the Tangguh project.
The Tangguh project was initially developed jointly by
Pertamina and Atlantic Richfield Co. (Arco), but BP Amoco
acquired the project earlier this year and took over Arco's
position.
Andrew Barton, head of energy analysis at BP Amoco Plc, has
said China offers a huge market for Indonesia, due to the
estimated rapid increase in energy consumption.
He said growing economies like China would prefer building gas
power plants to coal or oil, as gas was cheaper and cleaner for
the environment.
Barton also said Indonesia's LNG might find many potential
markets in the Asia Pacific regions, including traditional buyers
Japan, South Korea and Taiwan.
The Tangguh project located in Berau Bay has a proven reserve
of 14.4 trillion cubic feet (tcf) and is expected to start
production in 2005.
Its gas will come from the Wiriagar, Berau and Muturi areas
and will initially supply two trains with an annual production
capacity of up to six million tons of gas.
The Tangguh project is estimated to yield some $60 billion
over the project's lifetime of about 30 years.
With the purchase of Arco earlier this year, BP Amoco is
poised to become Asia's largest LNG producer, controlling 7
percent of the gas reserves in the region.
The company is also developing the Hainan gas field in China,
which is the country's largest offshore natural gas find holding
three trillion cubic feet of reserves. (bkm)