Govt to start renegotiating Tangguh LNG sales contract with Fujian in early '12

The government plans to start renegotiating the sales and purchase contract of LNG from Tangguh, operated by BP, sold to Fujian, China in the first quarter of 2012 (1Q2012), said Director General for Oil and Gas at the Energy and Mineral Resources (ESDM), Evita H. Legowo.

?We (the government) have planned to start the renegotiation in 2012. We will form a team at end of this year,? said Evita during a hearing with Commission VII of the House of Representative (DPR) on Monday.

Evita said principally the government still honor the contract. Therefore, the renegotiation will be done openly and in transparent manner. The government would renegotiate the price of LNG sold to Fujian to adjust it to current higher price and to take into consideration the incrasing domestic needs.

?We don?t know yet whether portion of the LNG will be reallocated to domestic market, or they (Fujian side) agreed to buy at higher price,? Evita said.

The sale price of LNG to Fujian China currently set at US$3.35 per MMBTU, far lower than the price of LNG from Badak LNG plant in East Kalimantan to buyers in Japan at US$16 per MMBTU.

Earlier, PT Pertamina has said it is interested to get gas from Tangguh and willing to pay three times higher than current price charged to Fujian. Pertamina is seeking to purchase 1.5 MTPA of gas from the Tangguh field to supply its floating storage and regasification unit (FSRUs) at the Jakarta Bay. (roffie/romel)