Japanese firms extend Indonesian LNG contract

Japanese firms extend Indonesian LNG contract

TOKYO (Dow Jones): Tokyo Electric Power Co. and Tohoku Electric Power Co. said Tuesday they have agreed with Indonesia's state-owned Pertamina to extend their existing term liquefied natural gas contract for five years through the end of 2009.

However, the volume of LNG the two Japanese power utilities will buy following the extension will be less than one-third of that in the current 21-year contract, which will run until December 2004.

Under the new contract signed Monday, the two companies will buy a total of 960,000 metric tons a year of LNG on a free on board basis from Indonesia's Arun II terminal between January 2005 and December 2009.

The northern Japan-based Tohoku Electric will buy about 830,000 tons per year, while Tokyo Electric, or Tepco, will purchase about 130,000 tons annually.

At present, Tohoku Electric buys 3 million tons a year of LNG and Tepco buys 510,000 tons a year from the Arun II project.

"We are aiming for diversifying supply sources for LNG, to secure economical feasibility and stability of the supply," a spokesman for Tohoku Electric said.

Tohoku, which bought a total 3.7 million tons of LNG from Indonesia, Malaysia and Qatar in the year ended March 2000, is in negotiations to start buying LNG from Australia's North West Shelf project although nothing concrete has been decided.