Fujian may get first LNG from Bontang

Indonesia may send the first LNG to China's Fujian province from the Bontang LNG plant in East Kalimantan rather than the Tangguh LNG plant in West Papua, a BPMIGAS senior official said on Tuesday.

Indonesia may ship between two and four cargoes of LNG from the Bontang LNG plant to Fujian. This will allow the Bontang plant to reduce its stock and the Tangguh LNG plant to delay first shipment to Fujian, Djoko Harsono, Deputy Chairman in charge of Marketing said.

"The option has been discussed on technical and concept levels. But, a decision will be made after a commercial discussion with stakeholders," he said.

Bontang will have 15 cargoes in excess stock this year as result of decreasing orders from traditional buyers in Japan, South Korea and Taiwan. The buyers have asked Indonesia to reduce its supplies to the countries, citing weak demand amid economic slowdown.

Indonesia signed a contract in 2002 to supply Fujian with 2.6 million tons per year of LNG from the Tangguh LNG plant for a period of 20 years starting 2009. The 2002 contract capped the crude reference price at $25 per barrel. The ceiling reference price was revised $38 per barrel in 2006.

According to Djoko, the Bontang LNG will be sold to Fujian at Tangguh's price.

Meanwhile, BPMIGAS' Chairman R. Priyono said another option to reduce the excess stock in Bontang is to supply the LNG for domestic use.

State owned fertilizer firm PT Pupuk Iskandar Muda in Nangroe Aceh Darussalam is expected to buy up to nine cargoes.

"Besides, BPMIGAS is talking with several potential domestic buyers," he said. (Bernard)