Indonesia plans to raise LNG export to Taiwan

Indonesia plans to raise LNG export to Taiwan

JAKARTA (JP): State oil and gas company Pertamina said on
Thursday that it was planning to export more liquefied natural
gas (LNG) to Taiwan from the Bontang LNG plant in East Kalimantan
and the Tangguh plant in Irian Jaya.

Pertamina president Baihaki Hakim said that Pertamina was
expecting to join a tender for the supply of between 1.5 million
tons and 3 million tons of LNG to Taiwan.

"There is a chance for us...I received information that the
Taiwan government wants at least two participants for the
tender," Baihaki told reporters on the sidelines of a meeting
with the House of Representatives' Commission VIII, which
oversees energy and mining affairs among other things.

After Japan, Taiwan is the second largest buyer of Indonesia's
LNG with imports of over 3 million tons per year.

In his written response to the Commission's questions, Baihaki
said that the planned LNG supplies would be for Taiwan's Tatan
Power Plant, which would be developed by Taipower in the northern
part of Taiwan.

He said that bidders for the supply of LNG had to participate
in the construction of an LNG receiving terminal unit which will
supply gas to the power plant.

Gas company Tung-Ting Gas, in a partnership with an
unidentified LNG producer from Qatar, is so far the only bidder
for the construction of the LNG terminal and consequently
Taipower has decided to extend the bidding period to this month.

He said that state owned petroleum Chinese Petroleum
Corporation (CPC) was willing to join the tender for the project
and was now forming a consortium with Beyond Petroleum (BP) for
that purpose.

"In this regard, BP as the operator of the Tangguh project
will participate as a foreign partner in the consortium (to
supply LNG for the power plant), with the LNG supply expected to
come from Tangguh," he said.

To obtain the LNG supply contract, he said, Pertamina had to
offer competitive prices against those offered by its competitor.

He noted however that it was difficult to offer a competitive
price for LNG from the Tangguh LNG plant because the LNG plant
was a new project and the construction cost would boost the price
of its gas.

"Without trying to be a pessimist, I must admit that the
competition is tough," he said.

He noted however that Pertamina could still compete by
offering cheaper LNG from the Bontang LNG plant, which is already
in operation.

Pertamina initially expected to secure an LNG contract by the
end of this year to kick off the five-year construction of the
Tangguh project.

The Tangguh project, located in Berau Bay, will be fed with
gas from the Wiriagar, Berau and Muturi areas, which have a
proven reserve of 14.4 trillion cubic feet (tcf).

The Bontang LNG plant operates seven LNG trains and produces
approximately 22 million tons of LNG per year.

Pertamina exploration and production director Gatot K.
Wiroyudo said that to win the Taipower project, Pertamina could
start Tangguh's construction even though there is demand for only
one train or about 500 million cubic feet per day of gas (mmcfd).

He said that normally the construction of an LNG plant was
only feasible if there was enough demand for at least two trains.

"For Tangguh, we can invest in just one train and still go
ahead," he said.

Pertamina is also seeking to supply 3 million tons of LNG to
power plants in China from the Tangguh LNG plant.

Baihaki said the tendering process for China's Guangdong LNG
project was entering the second phase, in which the Chinese
government would select potential foreign partners for the
development of an LNG receiving terminal for the Guangdong LNG
project.

He said that BP would join the tender for the construction of
the LNG terminal.

"After the new consortium is formed, the tender of the LNG
supply will be held, that is sometime in early 2001," he said.
(bkm)