Migas names Pertamina to sell LNG to Japan
Migas names Pertamina to sell LNG to Japan
Fitri Wulandari and Indra Harsaputra, Jakarta/Surabaya
The Oil and Gas Implementing Body (BP Migas) has appointed
state oil and gas firm PT Pertamina as the sole agent to market
liquefied natural gas or LNG to Japan, Indonesia's largest LNG
importer.
Rachmat Sudibyo, the head of BP Migas, said the agency was
preparing proposals that would be tabled by Pertamina in its
negotiation with Japanese buyers to extend contracts that are due
in 2010.
The contracts cover the sale of a total of 12 million tons of
Indonesian LNG per annum to Japan.
"The price of the LNG and the contracts scheme -- whether
based on a quota or per-annum system -- will depend on the
results of the negotiation between Pertamina and the Japanese
buyers," Rachmat said in Surabaya last week.
Rachmat noted, however, the appointment of Pertamina as the
sole LNG agent of the LNG market still needed approval from the
country's LNG producers.
Indonesia, one of the world's largest LNG exporters, has two
LNG plants -- located in Bontang, East Kalimantan and Arun, Aceh
-- with a combined capacity of 31 million tons per annum.
Japan, Indonesia's largest LNG importer, absorbed 68 percent
of Indonesia's total LNG exports of 27 million tons in 2002.
Indonesia has been intensively lobbying Japanese buyers to
extend the contracts amid tougher challenges posed by countries
such as Qatar, Australia and Malaysia.
Energy expert Kurtubi, who is also a Pertamina official,
lauded BP Migas' move, while saying it was better for Pertamina
to take over LNG marketing for all markets.
Kurtubi said with years of experience in marketing the fuel,
Pertamina would be better able to approach buyers.
"In the LNG market, price is not the sole factor. Since most
LNG contracts are long-term, buyers prefer to do business with
parties they have already known," Kurtubi told The Jakarta Post
over the weekend.
In the past, Pertamina was authorized by the law to market LNG
produced by production-sharing contractors (PSC). However, with
the introduction of Law No. 22/2001 on oil and gas, every PSC has
the right to sell its LNG.
Kurtubi said leaving PSCs to sell their own LNG would not
guarantee a maximum return for Indonesia as a whole, because PSCs
had conflicting interests as they had overseas operations that
might bid on the same market. The government takes about 70
percent of the proceeds from natural gas.
Kurtubi suggested Pertamina not only sell LNG, but also have a
participating interest in the receiving terminal or the power
plant that would use the LNG.
"It will increase Pertamina's bargaining power," he said.
No PSC officials were available for comments on Saturday.
Although, previously, some PSC officials voiced opposition to any
move to appoint Pertamina as the sole seller of Indonesian LNG,
citing a possible conflict of interest. Rather than marketing
other firms' LNG, the state-owned firm might sell the LNG from
its planned project in central Sulawesi, they suggested.