BP in talks to sell Tangguh gas to PTT, domestic fertilizer plant

Upstream oil and gas authority BPMIGAS said on Thursday that it and Anglo-American energy giant BP Plc are in advanced talks to sell LNG from Tangguh project that was originally intended for Sempra Energy with Thai firm PTT and a local fertilizer firm.

BPMIGAS Deputy Chairman in Charge of marketing Djoko Harsono told reporters Tangguh project will supply 350,000 tonnes per annum of LNG to PTT and the local fertilizer firm.

?Talks are now ongoing. We haven?t closed deal on price, volume and supply period for each buyer,? he said, adding that the 350,000TPA volume was the maximum remaining volume allowed to be diverted from Sempra under the supply deal with Tangguh.

Djoko said that local fertilizer firm would buy Tangguh LNG through swap mechanism either with Aceh?s Arun LNG plant or East Kalimantan?s Bontang LNG plant. Under the mechanism, the said LNG plant will supply gas to the fertilizer plant equal to the volume of LNG it would buy from Tangguh. There are two major fertilizer plants that uses the swap scheme, namely Pupuk Iskandar Muda in Aceh and Pupuk Kalimantan Timur in East Kalimantan. Djoko did not disclose the name of the fertilizer plant.

BP-operated Tangguh LNG is contracted to supply 3.7 million tonnes of LNG starting 2009 to Sempra?s receiving terminal in Costa Azul, Mexico. Under the contract, Sempra would pay the Tangguh LNG based on Southern California (Socal) index price. BP could divert half of the volume of LNG by paying $1 per MMBTU premium to Sempra

BPMIGAS officials earlier said that South Korean firm KOGAS had agreed to buy 1MTPA of LNG from Tangguh and Japan?s firm Tokyo Gas is already in advanced negotiation to close 500,000 MTPA supply deal from Tangguh. (bernard)