Govt okays Pacific Oil plan to build, operate Bontang?s ninth LNG train

Minister of Energy and Mineral resources Purnomo Yusgiantoro said on Saturday the government had in principle given green light for Hong-Kong based company Pacific Oil & Gas Limited to build and to operate Bontang?s ninth LNG plant, also known as Train I.

?Principle agreement had been issued and LNG sales and purchase deal with the Chinese province of Jiangshu is expected to be closed December this year in Bali,? Purnomo told reporters.

Purnomo said potential demand from Jiangsgu is around 5 million tons per annum, with first delivery expected around 2007-2008.

Pacific Oil &Gas is proposing to build and operate Bontang?s Train I and eyeing Jiangshu as its market. Pacific is known to be backed by Indonesian tycoon Sukanto Tanoto, which has close links to the country?s top decision makers.

Meanwhile Rachmat Sudibjo, chairman of Indonesian upstream oil and gas authority BP Migas said that the principle agreement was good only if Pacific Oil agreed that Indonesia would still retain the plant?s marketing right. ?Otherwise, the plant has the potential to compete with Indonesia?s existing LNG plants,? said Rachmat. He also said the train would also be treated as downstream sector, meaning the plant would not be subject to cost recovery and Pacific Oil must pay natural gas from producers.

The Bontang LNG plant is 56 percent owned by Indonesia's national oil and gas firm Pertamina , and is operated by PT Badak NGL Co. Total E&P Indonesie, a unit of Total S.A., also has a stake in the facility. Total Fina Elf is the operator and a 50 percent stakeholder in the Mahakam production sharing block, which accounts for 63-65 percent of 3.7 billion to 3.8 billion cubic feet a day of gas processed into LNG at Bontang. (godang)