Mitsubishi mulls supplying Indonesia LNG to U.S. market

Mitsubishi mulls supplying Indonesia LNG to U.S. market

Tony Hotland, The Jakarta Post, Jakarta

The Mitsubishi Corporation is mulling supplying liquefied
natural gas (LNG) from Indonesia to the California market in the
United States.

Mitsubishi's energy business group manager in Jakarta Mauren
Toruan said the firm's subsidiary Sound Energy Solutions had
applied to the U.S. Federal Energy Regulatory Commission (FERC)
and California's Port of Long Beach for a license to construct an
LNG terminal at the port.

"After the filing, we will start serious negotiations to
secure five million tons per annum of LNG for the terminal and
send a delegation to Indonesia," said Mauren.

If the FERC and Long Beach authorities approve the LNG
terminal project, Mitsubishi would start construction by the end
of this year, aiming for completion in late 2007, he said.

The planned US$400 million terminal is designed to provide
around 700 million cubic feet of gas daily, which will meet 10
percent of demand in California.

Mauren said the company favored Indonesia as the LNG supplier
for its California terminal because of its flexibility in
pricing.

Indonesia is willing to sell its LNG according to the U.S.
pricing scheme, rather than the Japanese pricing scheme -- upon
which Indonesia has been selling LNG for decades to the Asia-
Pacific market.

"In the U.S., the price of natural gas moves separately from
crude oil price ... LNG price in Japan is linked to crude oil
price," said Mauren.

Japan is a traditional LNG buyer from Indonesia, along with
South Korea and Taiwan.

Indonesia and other LNG producers in the region, including
Australia and Malaysia, are eying the huge potential of the U.S.
gas market.

Mauren said another reason for choosing Indonesia was because
Mitsubishi also had a stake in Papua's Tangguh LNG project, which
is being developed by a consortium led by Anglo-American energy
giant BP Plc.