BPMIGAS to take part in renegotiating Fujian LNG contract

Head of upstream oil and gas regulator BPMIGAS, Raden Priyono said his office is ready to become member of team to renegotiate sales purchase contract for liquefied natural gas (LNG) sent to Fujian, China.

Priyono said the renegotiation of the price of gas from LNG Tangguh project to be carried out in 2012 must be prepared thoroughly.

He noted that gas contract has been supported by the government of both countries, Indonesia and China, when the gas sales purchase contract was signed. There was government-to-government consensus and we have to respect that.

?The price issue or commercial price is important. However, the good relation between both countries is also important. Therefore, the renegotiation of the price of gas from Tangguh to Fujian in 2012 must be thoroughly prepared,? said Priyono.

The renegotiation of LNG to Fujian is done at the same time with renegotiation of gas contracts between gas producers and domestic buyers. A number of gas contracts between gas producers and state gas distributor PT Perusahaan Gas Negara Tbk (PGN) have been inked and many more are underway.

The sale price of LNG to Fujian China currently set at US$3.35 per MMBTU, far lower than the price of LNG from Badak LNG plant in East Kalimantan to buyers in Japan at US$16 per MMBTU. BPMIGAS aims to push gas price contract at average US$5-6 per MMBTU for contracts that have set gas price at around US$3 per MMBTU.

On Thursday, state oil and gas company PT Pertamina said it is ready to purchase LNG from Tangguh LNG project three times the price of LNG currently charged by BP, Tangguh operator, to Fujian China.

?We have proposed to the government to renegotiate gas purchase contract between BP Tangguh and Fujian. We are willing to purchase the price of LNG (from Tangguh) three times the price it sold to Fujian,? said Vice President for Corporate Communication of PT Pertamina, Mochamad Harun. (godang)