Pertamina upbeat about sale of LNG to Taiwan

JAKARTA (JP): State oil and gas company Pertamina expressed optimism it would win the tender to supply liquefied natural gas (LNG) to Taiwan, with Qatar its only competitor at this point.

The director of production sharing at Pertamina, Iin Arifin Takhyan, said Pertamina and Qatar were the only two bidders to supply three million tons of LNG to Taiwan annually.

"Our people there told us that we have a good chance to win," Iin told The Jakarta Post during a break in a hearing between the Ministry of Energy and Mineral Resources and the House of Representatives Commission VIII for mines and energy affairs.

After Japan, Taiwan is the second largest purchaser of Indonesian LNG, importing over three million tons per year.

According to Iin, Pertamina could offer Taiwan a more competitive price than Qatar, partly because of the latter's greater distance from Taiwan.

Although Qatar has huge gas reserves, its relatively remote location means higher transportation costs.

Iin said Taiwan hoped for three bidders, but would proceed with the tender if a third bidder failed to appear soon.

"We are expecting an answer from Taiwan very soon," Iin said, adding that it could come within one or two months.

He said the contract for the sale of the LNG also would include the construction of an LNG receiving terminal in Taiwan.

"The Taiwan government wants a complete package, and the LNG price we offer will factor in the construction costs of the receiving terminal," he said.

He said either Pertamina or Qatar would have to form a joint venture with a company from Taiwan to build and operate the LNG receiving terminal.

The construction cost of the terminal, however, has not yet been estimated.

If it wins the tender, Pertamina will supply gas to Taiwan's Tatan power plant, which Taipower plans to build in the northern part of the country.

Iin said Pertamina planned to supply the LNG from its Bontang LNG plant in East Kalimantan.

Operating seven LNG trains, the Bontang plant produces approximately 22 million tons of LNG per year.

Pertamina at first wanted to supply the LNG from its as yet constructed Tangguh LNG plant, but apparently dropped the plan because construction of the plant would affect the LNG price.

The Tangguh plant, to be located in Berau Bay, Irian Jaya, will process gas from the Berau and Muturi areas, which have proven reserves of 14.4 trillion cubic feet.

Its construction, however, depends on Pertamina's ability to find a market for the gas.

Iin said Pertamina offered Taiwan a 20-year contract for its LNG. But he could not estimate how much revenue Pertamina expected from the possible deal, saying only that it would be in the billions of US dollars.

Pertamina president Baihaki Hakim said earlier that Australia might be the third bidder for the project.

He was quoted by mines and energy news portal petromindo.com as saying Australia was lobbying Taiwan government officials.

Meanwhile, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said Pertamina was considering the purchase of oil wells owned by Spanish oil and gas firm Repsol-YPF.

Repsol wants to sell its wells in the Java Sea to Pertamina to raise cash to repay its debts.

Purnomo said the Spanish oil firm offered Pertamina three options: taking over 100 percent ownership of the oil wells, which are valued at $800 million, or purchasing 50 percent or 25 percent of the wells.

"We (the government) want Pertamina first to consider the technical and economic aspects of the offer," he said during a break in Wednesday's hearing with House Commission VIII. (bkm)