Indonesia to ink China LNG deal Thursday: Purnomo
Indonesia to ink China LNG deal Thursday: Purnomo
Maki Aoto, Dow Jones, Osaka
Indonesia will sign a long-term contract with China Thursday to
supply liquefied natural gas (LNG) to Fujian province, energy
minister Purnomo Yusgiantoro said.
A bilateral meeting in Bali Wednesday will be followed by a
formal agreement the next day, Purnomo told Dow Jones Newswires
in an interview Sunday on the sidelines of the International
Energy Forum.
The Fujian contract is crucial for Indonesia after it lost out
to Australia on a more lucrative, US$13 billion LNG supply
contract to China's Guangdong province last month.
A consortium led by Indonesia's state-run oil and gas concern
Pertamina and BP PLC will supply 2.5 million metric tons of LNG
under the proposed contract to a planned terminal on the Fujian
coast opposite Taiwan.
The LNG will come from the Tangguh gas field in Irian Jaya,
Papua province, which BP is currently trying to develop.
Natural gas production from the Tangguh project is estimated
at 3 million to 4 million tons a year. Tangguh had been tipped to
win the Guangdong LNG supply deal.
China will start construction of the Fujian terminal in 2004,
and is expected to start operations in 2006.
Purnomo said development of the Tangguh LNG project would
follow strict economic principles.
"You are talking about a 20-year or 25-year contract," he
said. "My team...is consisted of stake holders (in the Tangguh
project) - the players, so if they agree, that means 'go ahead.'"
Purnomo also said that the award of the Guangdong LNG supply
contract to Australia was "a comprehensive decision." It was
believed that proposals by Indonesia and Qatar undercut those by
Australia on price.
Most industry watchers said fears of potential supply
disruptions due to separatist unrest in Papua province were a key
factor in China's decision on the Guangdong project.
Japanese LNG importers have been hoping that competitive
prices from the Tangguh LNG project would help push down LNG
prices from other supply sources in Indonesia and elsewhere.
But Purnomo said Indonesia will continue to adhere to the
current LNG pricing formula with existing customers under
existing long-term contracts.
"The Tangguh project is different...it's a new project. You
can't mix (projects) together," he said.
Indonesia is one of Japan's main sources of LNG, supplying
some 8.2 million tons a year under a long-term contract that
started in 1977.
"On December the 10th, we are going to celebrate the 25 years
of marriage with the Japanese," Purnomo said. "Besides the
business itself, you have loyalty, confidence with each other.
Otherwise, you will divorce."