Govt defends LNG price level in Fujian contract

A senior government official on Thursday dismissed speculations that the price of Indonesia?s liquefied natural gas (LNG) for China?s Fujian province was lower than normal levels, Kompas daily reported on Friday.

Indonesia oil watch dog BP-Migas chairman Rachmat Soedibjo said the price of Indonesia?s LNG for Fujian was exactly higher than the price it had offered for LNG supply to Guangdong, another province of China. Moreover, Indonesia?s LNG price for LNG supply to Guangdong was even higher than the level offered by Australia.

Rachmat said further LNG for Fujian was sold under free on board (FOB) price system, while LNG for Guangdong followed the cost insurance & freight (CIF) price system.

Indonesia and China signed in September an agreement to supply 2.6 million tons of LNG to Fujian annually under a 25-year contract.

Meanwhile, Indonesia in August lost to an Australian consortium in a tender to supply some three million tons of LNG per year to Guangdong over a 25-year period.

LNG to be shipped to Fujian will come from Tangguh, Papua where a consortium led by BP Plc is making preparations to build a massive LNG plant. Tangguh had also been planned to supply LNG to Guangdong. (*)