BP Migas signals Indonesian LNG producers may compete openly

Indonesian upstream management authority BP Migas on Thursday signaled that it might allow Indonesian LNG producers to openly compete in LNG marketing, a thing that Indonesia never did in the past.

?The market is changing, and I think it would be fair if we let Indonesian LNG producers, to some degree, to compete openly for market. But we will set some rules, for example, they will not be allowed to offer too low a price to buyers,? said BP Migas chief Rachmat Soedibjo in a press briefing.

He said there will be no problem if, for example, Bontang and Tangguh LNG centers compete openly in an LNG tender.

?This is all about marketing. If Bontang and Tangguh could each secure strong local partners in an LNG tender, say, for example in Taiwan, then the chance of winning the tender is bigger,? he said. ?But we have to make sure they are not conducting cutthroat competition that would bring prices down and would cause loss to the government.?

?However, we will stick to Indonesia Incorporated principle which will put the interest of Indonesian government as first priority,? he said. ?In order to make sure of that, the government will soon form a committee tasked to formulate LNG marketing strategy.?

In the past, Indonesia is solely represented by state oil and gas company Pertamina in LNG marketing.

Under the new oil and gas law, however, there is no clear-cut rule, whether LNG producers are allowed to separately sell their products to buyers. The law only says that BP Migas could assign business entities to sell oil and natural gas.

Indonesia is the world?s largest LNG producer with 29 million tons per annum production capacity from Arun and Bontang LNG centers in Aceh and East Kalimantan, respectively. The third center, Tangguh LNG in Papua, is scheduled to commence production in 2007 with capacity of 7 MTPA. (alex)