Government prepares tax pact to support bid to sell LNG to China

The government is preparing a tax agreement with China in a bid to improve the bargaining position to win the tender to supply Liquefied Natural Gas (LNG) to the country?s a major LNG plant in Guangdong province, Kompas daily reported.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Saturday that a special team had left Indonesia for China on Tuesday to talk over the tax agreement.

The minister said he hoped the bilateral tax agreement would be able to strengthen the Indonesian position in the bidding to export LNG from the planned Tanggul gas project in Irian Jaya to China. ?Indonesia is trying hard to be able to win the tender to give a better access to cater the growing LNG in China,? he added.

Indonesia is competing with major world?s LNG producers from Australia, Qatar, Brunei Darurusalam, Iran, Malaysia, and Russia in a tender to supply LNG to Guangdong. The LNG plant, which is now being constructed in Guandong, will need about 3 million tons of LNG when the plant begins its construction in 2005.

The minister said that the planned tax agreement is part of a number of bilateral economic cooperation plan which has been proposed to the Chinese government. Among of the cooperation plan will cover energy sector.

Purnomo refused to unveil the price of the LNG offered to China but he said the government had closely monitoring the price development through a market intelligent to ensure that the Indonesian LNG price is much more competitive. (*)