Exspan wants to join Marathon in LNG transportation

U.S. energy company Marathon Oil Corporation is studying the offer from PT Exspan Nusantara to join in the transportation of liquefied natural gas (LNG) from the latter?s Donggi gas field in Central Sulawesi to Mexico under a long-term supply agreement, an Exspan official said Thursday.

The offer was Exspan?s move to break possible deadlock in pricing negotiations between the two companies, Exspan vice president director Pudjo Suwarno told Petromindo.com on the sidelines of Exspan Study Forum in Jakarta.

?The LNG price proposed by Marathon is not economical for us considering the long distance between Donggi and Mexico,? Pudjo argued.

Exspan, through PT Exspan Tomori Sulawesi, operates Donggi Block in Central Sulawesi.

In August, Exspan and its partner state oil and gas firm Pertamina signed a memorandum of understanding (MOU) with Marathon for LNG supplies to Mexico.

Under the terms of the MOU, Exspan and Pertamina would provide up to six million metric tons of LNG per year for a period of 20 years. The LNG would be shipped from a new LNG plant to be constructed in Donggi to the proposed Tijuana Regional Energy Center being developed in Baja California, Mexico, by Marathon and its co-participants.

Tijuana Regional Energy Center is an integrated complex that will consist of an LNG offloading terminal and a 750 million cubic feet per day regasification plant, a 1,200-megawatt power generation plant to supply regional electricity needs, a 20-million gallon per day seawater desalination plant to provide fresh water for the city of Tijuana, wastewater treatment facilities to augment existing processing capacity of the San Antonio de Los Buenos treatment plant, and related natural gas pipeline infrastructure.

Pudjo also said Thursday that Exspan was trying to offer Donggi LNG to other countries like China, Japan and South Korea as well as the domestic market.

Exspan has signed MOU with state power company PLN, Pertamina, U.S. construction firm Kellog Brown Root, Mitsui Bank and Korean Electric Power Company and Deutsche Bank to build LNG receiving terminals on Java Island, Pudjo said.

Exspan is a subsidiary of publicly listed oil firm PT Medco Energi International. (godang)