BPMIGAS says Sempra LNG diversion talks continue

Indonesia is continuing negotiation with prospective buyers in Japan, Taiwan and Thailand over North America-designated Tangguh LNG cargoes that could be diverted to other place under LNG supply deal between BP Plc and US energy firm Sempra Energy, a BPMIGAS official said on Thursday.

BPMIGAS Chairman Kardaya Warnika told Petromindo.Com on a sideline of Indonesian Petroleum Engineers Association conference in Yogjakarta Thursday that BP is currently in talks with a group of Japanese buyers, Taiwan’s Chinese Petroleum Company and Thai’s PTT.

Under the deal with Sempra, said Kardaya, BP must pay US$1 for every MMBTU of LNG diverted. “So now, BP and Indonesia are now trying to find buyers that are willing to pay Socal price plus at least $1 premium. Those who offer highest premium would likley get the volume, as it would give government highest revenue,” he said.

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

BP and Indonesian government is considering to divert Sempra LNG cargoes as currently prices in East Asia, are much higher than those of North America.

He, however, did not say the time line of the talks’ conclusion. (alex)