Govt will not sell LNG at loss: Purnomo

The government will not sell liquefied natural gas (LNG) to foreign countries at a loss. Although the selling price of LNG to Fujian is just US$2.4 per million British thermal unit (MMBTU), it is a landed price and can be changed according to fluctuations in the world crude oil prices, Harian Ekonomi Neraca newspaper quoted Minister of Energy and Mineral Resources as saying in its Wednesday’s edition.

“Therefore, it will be wrong to assume our agreement with Fujian is causing losses, or far below the price of our subsidized kerosene. The US$2.4 price is a landed price it can be changed according to the fluctuations in the crude oil prices Purnomo said in Jakarta on Tuesday.

Purnomo was responding to comments made by oil and gas sector’s analyst Kurtubi, who said that Indonesia must revise the selling price of LNG to Fujian as it was too low.

The minister said Indonesia has always been selling its LNG at a higher price to foreign countries and the price is better than the domestic price.

As far as the LNG exports to California are concerned, there is no problem from the price of point of view. After all, it is a question of price scheme based on Henry Hub standard price. But there is always been a safe clause in the agreement if the oil prices rise.

Last week, BP Indonesia -- a unit of Anglo-American energy giant BP Plc and production sharing contractor of Tangguh gas field in Papua province – signed a 20-year preliminary contract with U.S. based Sempra Energy, under which it would supply around 3.7 million tons of LNG per year to Sempra starting 2007. (*)