Govt offers LNG price up $10 to western buyer: Minister

The government is offering up US$10 per MMBTU to Japanese customers known as Western Buyers for the LNG from Bontang to be delivered after the current contracts expire in 2010-11, Minister of Energy and Mineral Resources said on Wednesday.

Purnomo Yusgiantoro also said Indonesia is close to clinch a deal with the Western Buyers on the extensions of the contracts.

?The amount of LNG that will be delivered under the contract extensions will not be much, we shall only allocate 3 million tons (for exports), because we shall direct (the remaining volume) to the domestic market,? Purnomo Yusgiantoro told reporters.

The contracts with the Western buyers on some 12 million tons per annum of LNG supplies from the Badak LNG plant in Bontang, East Kalimantan expire in 2010.

The plant, which is used to be the world?s largest with a production capacity of 22 million tons per annum (MTPA), is currently operating at a 18 MTPA capacity due to dwindling gas from two of its three gas suppliers, namely VICO Indonesia and Chevron Corp. Only Total E&P Indonesie can still meet production commitment of 2.6 BCFD. Output from the three gas producers will constantly decline towards 2012, with the exception of Chevron, which may add some 800MMCFD to its production in 2015, when its deep water projects are expected to come onstream.

VICO Indonesia, which has been producing gas since the seventies might not be able to continue production after 2012 due to reserves depletion. (godang)