Sempra hopes to clinch LNG deal in June
Fitri Wulandari, The Jakarta Post, Jakarta
U.S.-based Sempra Energy expects to seal a contract in June this year to buy three million tons of liquefied natural gas (LNG) from the Tangguh plant following a relatively smooth negotiating process, a Sempra official said.
"There is a lot of work to do but expect that by probably the end of the second quarter of this year we should have clinched the deal," Michael Sliwoski, Sempra's vice president, told The Jakarta Post and Koran Tempo on the sidelines of an oil and gas industry meeting in Bogor, West Java, on Friday.
Sliwoski said that although it was a complex contract, it had taken a relatively short time to agree on the details.
"It's a very detailed contract so it will take a number of months to work out, but even this is a short time as normally such contracts take up to three years to finalize," he said.
"We found the negotiations very straightforward and commercially oriented," he added.
If the deal is completed, the Tangguh LNG plant in Papua province, which is operated by a consortium led by BP Plc, will supply three million tons of natural gas per annum for twenty- years to the United States, the largest energy consumer in the world.
The Tangguh LNG project is the country's third LNG plant after Bontang in East Kalimantan and Arun in Aceh. The latter two facilities have a combined installed capacity of 31.6 million tons per year.
Asked if Sempra would also talk to other LNG producers in Indonesia, Sliwoski said the supplies from Tangguh would be sufficient.
"But we are very open to discussions with other suppliers in Indonesia for other potential projects we have in the U.S.," Sliwoski said.
Sempra Energy currently has two LNG receiving terminal construction projects. One is on the east coast and the other the west coast of the U.S.
Sliwoski said the selection of Indonesia to supply the gas had been based on a combination of quality, security of supply and price.
"The quality of Indonesia's gas matches the quality that we need. Security of supply is important. We are buying LNG for 20 years. We feel that Tangguh gives us that security. And finally there are the price and time factors," Sliwoski said, adding that no agreement had been reached thus far on the price.