Govt has not made any decision on Senoro gas: Vice President

Vice President Boediono had acknowledged that the government?s decision on the fate of the Donggi-Senoro LNG project in Southeast Sulawesi could not be made on March 31 as expected because a number of issues regarding the project still needed a thorough study.

Speaking during a meeting in the province?s capital Palu on Thursday, Boediono said that the decision was delayed because the government still needed more time to calculate the ideal volume of gas that had to be exported and those that had to be sold in the domestic market.

?An intensive study is being carried out to ensure that the Southeast Sulawesi people will not suffer loses from any decision to be taken,? he added.

The project has been delayed for more than two years, causing certainty not only to its developers but also to its potential buyers.

Medco and Pertamina previously planned to build the LNG project in cooperation with Japanese company Mitsubishi. The LNG to be produced from the Senoro plant will be exported to Japan. The consortium latter cancelled the project after it failed to get a green light from the government, which insisted that the LNG from the plant should be sold to local buyers.

Several domestic companies including PT Perusahaan Gas Negara Tbk (PGN), state electricity company PLN and state fertilizer company PT Pupuk Iskandar Muda (PIM) have offered to buy the LNG from the Senoro plant. But Pertamina gave no positive response to the local companies? proposal because they provided no financial guarantee for the construction of the LNG plant.

Medco and Pertamina needed the financing from local banks to continue the project because the Japanese bank which had previously agreed to provide the funds had pulled out from the project.

Medco and Pertamina will need at least US$3.7 billion to finance the project. About US$1.7 billion will be needed for the development of gas fields to supply the gas needs of the LNG plant. (*)