C. Sulawesi LNG plant to be delayed until 2010

The completion to build and operate the proposed LNG plant in Senoro, Central Sulawesi might be delayed to 2010 due to prolonged gas price negotiation between Pertamina and Medco on one side with Mitsubishi Corp.

Medco?s chief growth officer Rashid I. Mangunkusumo said in Jakarta Thursday that the ongoing negotiation between the consortium and the buyer on the gas contract price has been very tough and consequently, LNG plant might not be able to start production in 2009 as originally planned.

According to him, the seller and buyer have found it difficult to reach an agreement on the expected floor price due the fluctuation of crude oil price in the world market.

Last year, Pertamina and Medco had appointed Japan?s Mitsubishi Corp. to build and operate the proposed LNG plant in Central Sulawesi.

Under the cooperation scheme, Mitsubishi will have 60 percent shares in the 2-2.5MTPA LNG plant, with Pertamina and Medco equally share the remaining 40 percent stake. The plant would receive gas from Pertamina-operated Donggi block and Pertamina-Medco-operated Senoro-Toili block. Both blocks have combined proven and certified gas reserves of 2.3TCF. Pertamina and Medco would receive revenue based on actual LNG prices sold minus LNG plant?s costs and margin. Mitsubishi will also act as offtaker of Senoro LNG. (denny/bernard)