Pertamina upbeat about sale of LNG to Taiwan

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)