BP Migas, BP, CNOOC agree to raise ceiling price for Tangguh

Oil and gas upstream authority BP Migas, British energy giant BP Plc and Chinese firm CNOOC have agreed to raise the ceiling price for the LNG to be delivered from the Tangguh LNG plant in Papua to China.

The LNG price is linked to the price of crude oil. Thus, the price of Tangguh LNG will increase and fall depending on the fluctuation of the oil price. The initial gas sales and purchase agreement signed by the Tangguh consortium led by BP and CNOOC in 2002 set the oil ceiling price at $25 per barrel.

However, the agreement no longer reflects the market reality as the oil price has been on the increasing trend ever since the agreement and even reached the $70 mark last year. Currently, the price hovers at around $65 and $66.

BP Migas chairman Kardaya Warnika said the three parties had agreed on the increase in the oil ceiling price in a meeting in Jakarta.

?We shall meet ten days from now to decide on the new ceiling price,? Kardaya said, adding that the change in the agreement would add ?billions of dollars? to the future revenue of the Tangguh LNG plant.

During the meeting, CNOOC said it would remain the buyer of the Tangguh LNG, which it would deliver to China?s province of Fujian. And it expected no delay in the delivery of the LNG, according to Kardaya.

Earlier, BP proposed to divert some of the LNG to Shanghai as CNOOC could not fulfill all the requirements to make the gas sales and purchase agreement ?effective?. (Alex/Godang)