Govt to start renegotiating LNG Tangguh gas price to Fujian

By Godang Sitompul

The government will move ahead with its earlier plan to renegotiate the price of liquefied natural gas (LNG) from the Tangguh LNG project, operated by BP Plc, sold to Fujian. The realize the plan, the government will set up renegotiation team this month, Evita H. Legowo, Director General for Oil and Gas at the Energy and Mineral Resources Ministry, said.

?We set up the renegotiation team for Tangguh LNG price (to Fujian) this month. The team will comprise of officials from Finance Ministry, Energy Ministry and BPMIGAS,? Evita told Petromindo.com.

Evita said the renegotiation will hopefully start in March following the establishment of the team.

Meanwhile, Rudi Rubiandini, Deputy Chairman of Operation of the upstream oil and gas regulator BPMIGAS, said his office has signed a stipulation to form the negotiation team.

Rudi, who will become the head of the renegotiation team, said the team will renegotiate the upper limit of oil price as basis in determining the LNG price.

The price of LNG from Tangguh project sold to Fujian, China, was based on Japan Coctail Crude (JCC) oil price. Initially, the gas price was based on JCC oil price upper limit of US$25 per barrel, which was at US$2.4 per MMBTU. In 2006, the JCC oil price upper limit was at $38 per barrel and the gas price was adjusted to $3.35 per MMBTU, which remains until now. The gas price is considered far too low, prompting the government to renegotiate the gas price.

Edited by Roffie Kurniawan