Indonesia close to sign 6 MTPA LNG contract extension with Japanese buyers
Tuesday, November 8 2005 - 05:24 AM WIB
?The major points in the deal, including pricing are already concluded, just waiting to be signed,? said BPMIGAS chairman Kardaya Warnika. He said the deal would extend the contract that would expire around 2010 for another 10 years. Pricing formula, he said, would be based on Japanese Cocktail Crude price, but he did not elaborate. He only said that the buyers agreed to pricing formula proposed by Bontang LNG. Petromindo source said the deal would likely be signed by the end of this month.
Western buyers group are traditionally referred to as Kansai Electric Power Company, Kyushu Electric Power Company, Chubu Electric Power Company, Osaka Gas, Toho Gas Company, and Nippon Steel.
Kardaya further said that the Japanese buyers grouped in Western buyers had also expressed intention to extend another 6 MTPA contract from Bontang that would also be expired in 2010, but the government so far has not made any decision. ? The government may allocate 3MTPA of vacant Bontang capacity to be supplied to state electricity firm PLN, which is planning to build receiving terminal in Java. If that?s the case, Bontang would not be able to fully supplied another 6MTPA of contract extension to western buyers,? said Kardaya.
Some 12 MTPA of Bontang LNG contract with Japanese buyers would expire in 2010. The Japanese are committed to extend at least 6 MTPA of the contract, but they somewhat delay negotiation in order to get lower prices. The government for several years had been trying to get the Japanese buyers to extend the contract, but the Japanese insisted that Bontang should lower down the price to match the low price Tangguh LNG sold to CNOOC?s Fujian. ?Now that the market has changed again to sellers? market, the Japanese are eager to get the contract signed,? said Kardaya. (alex)