Indonesia does not pursue Fujian LNG price renegotiation: Minister
Tangguh to send first LNG cargo in July
Thursday, May 14 2009 - 06:14 AM WIB
?According to the contract, we can renegotiate the price of (LNG delivered to) Fujian every four years.(A renegotiation) is not necessary for the moment,? Purnomo said.
When asked for comments, Minister of Finance Sri Mulyani Indrawati, the leader of the Fujian LNG price renegotiation team, said she had no idea if the government had decided to drop the efforts to renegotiate the price.
?I would only comment until after I have received a letter from the Minister of Energy and Mineral Resources (regarding the termination of renegotiation efforts). I don?t know if the letter is already on my desk now, but I have yet to read it,? Sri Mulyani said before a meeting with the House of Representatives? Commission XI.
Indonesia signed a contract with China in 2002 to supply Fujian with 2.6 million tons per year of LNG from Tangguh for a period of 20 years starting this year.
Under the contract, the LNG price is pegged to the crude price. So the LNG price will rise and fall along with the fluctuation of the crude price. The 2002 contract set the crude ceiling reference price at $25 per barrel.
In 2006, four years after the signing of the contract, China agreed to revise upwards the ceiling reference price to $38 per barrel.
Last year, when the price skyrocketed to above $145 per barrel, Vice President Jusuf Kalla voiced loud criticism against the contract, saying the crude ceiling reference price is too low that Indonesia could not benefit from the rise in crude price. He thus called for a renegotiation of the contract price and President Susilo Bambang Yudhoyono later formed a renegotiation team led by Sri Mulyani.
Before the team started the renegotiation talks, however, the crude price started to decline amid the global crisis. Now, crude price hovers between $50 and $60 per barrel.
According to Purnomo, the Tangguh LNG plant is expected to send the first cargo of LNG to Fujian in July this year. (Godang)