Donggi Senoro consortium to sell LNG to Chubu and Kansai

PT Donggi Senoro LNG (DSLNG) has signed heads of agreement (HoA) with Japanese firms Chubu Electric Power Co. Inc. and Kansai Electric Power Co. to supply the latter with two million tons of LNG per year starting 2012.

The LNG will be supplied from the LNG plant to be built by DSLNG in Central Sulawesi.

?The HoAs were signed end of February. We have reached agreement on prices. Each of the firms will get 1 million tons of LNG per year over a period of 15 years starting end of 2012,? Lukman Mahfoedz, the president director of PT Medco E&P Indonesia, a DSNLG shareholder, said on Friday.

Other shareholders of DSLNG are state owned oil and gas company PT Pertamina and Japanese firm Mitsubishi Corp.

Lukman said DSLNG expected to get a governmental approval for the project soon that it can start developing the project this year.

?Ninety seven percent of lands for the project have been appropriated. The engineering process has been started. We are ready to go,? he said.

According to Lukman, the project will cost US$.3.4 billion, including expenses for the development of gas fields and LNG plant and management costs.

The government will get $7.7 billion in gas revenue share and tax throughout the contract period, assuming the oil price averages $80 per barrel during the period. The revenue will however be reduced to $6.2 billion, if the oil price averages $70 per barrel, according to Mahfoedz.

The LNG plant will be built by Mitsubishi while the gas will be sourced from the Matindok block wholly owned by Pertamina and Senoro block jointly owned by Pertamina and Medco. (Bernard)