Gas negotiation with Malaysia stalled: Source

Negotiation to supply natural gas from West Natuna Sea and South Sumatra to peninsular Malaysia may take a longer time to complete as the latter is recalculating its domestic need in the wake of a deeper global economic slump, according to an industry source.

?Petronas seems to holding down negotiations because they are currently evaluating their downstream needs. I think they haven?t clearly defined the market for that gas yet,? said the source.

Petronas and Indonesian state oil company Pertamina is negotiating to deliver 100 million standard cubic feet per day (MMCFD) of gas from Premier?s gas field in West Natuna for ten years, starting 2004.

The two parties are also negotiating to supply some 300 MMCFD of gas from gas fields operated by Gulf Indonesia Resources, Australian firm Santos, Pertamina and Spanish-Argentinean firm Repsol-YPF in South and Central Sumatra.

The source said the next meeting between Pertamina and Petronas was scheduled mid-November this year in Singapore.

?Pertamina would like to know whether or not Petronas is still interested to buy gas from Indonesia,? the source said.

This development is quite a setback. Earlier, a Pertamina official said that the only major problem that remained to be solved by both parties was the price of the gas.

?Indonesia has set the price for the gas at US$3.69 per million British thermal unit (MMBTU) but Malaysia has asked for a lower price,? the official said, but he refused to disclose the price being offered by Petronas.

Petronas and Pertamina had inked the first deal that would supply up to 250 MMCFD of gas to Malaysia from Conoco?s gas field in West Natuna Sea starting 2002. (Godang)