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Fri, 01 Aug 2003

JP/S. Korean firm interested in RI's LNG

S. Korean firm interested in RI's LNG

The Jakarta Post, Jakarta

South Korean electricity company Korea Electric Power Corp. (Kepco) has voiced interest in purchasing liquefied natural gas (LNG) from Indonesia, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Thursday.

Purnomo said he would visit South Korea for discussions with Kepco.

"We have not yet decided which plant will supply the LNG," Purnomo was quoted by Antara as saying.

If a deal is reached, Kepco is expected to buy between 1.1 million tons and 1.5 million tons of LNG per year from Indonesia starting in 2006, the minister said.

Purnomo said Kepco initially wanted to invest in Indonesia's power sector. The government welcomed this plan, but suggested it also buy LNG from the country.

A deal, if reached, would be more good news for the country's LNG industry, which is anxiously looking for buyers match its abundant capacity.

Indonesia has dominated the region's LNG market for decades, but recently several new players, including Malaysia, Australia, Qatar, Russia and Brunei, have entered the picture.

Last year, Indonesia lost out to Australia in a tender to supply three million tons of LNG annually to China's Guangdong province beginning in 2005. It was instead awarded a contract to sell 2.6 million tons a year to China's Fujian province beginning in 2007.

Indonesia also lost out to Qatar in a tender earlier this month to supply LNG to Taipower. This led to speculation that plans to build the country's third LNG plant, called Tangguh, in Papua might be canceled. The plant is being developed by a consortium led by Anglo-American energy firm BP PLC.

However, Purnomo said last week that Indonesia had won the tender for the supply of 1.5 million tons of LNG per year to South Korean power firm SK and steel producer Posco. The South Korean firms have yet to confirm Purnomo's statement.

Also last week, Indonesia signed a memorandum of understanding with Texas-based Marathon Oil Corp. to supply LNG from Indonesia to Mexico and the United States.