Indonesia seeks higher prices for piped gas, LNG

Indonesian government is trying to renegotiate existing gas pipe and LNG export prices that are considered no longer reflecting current state of high price oil era, a senior government official said on Tuesday.

?Indonesia will attempt to renegotiate pricing formula of gas export from ConocoPhillips-operated Natuna Sea Block B to Malaysia, which was capped on pricing formula of maximum HSFO price of US$118 per tonne, or equivalent to $25 per barrel of crude. That price no longer reflects current crude price of $130 per barrel,? Kardaya Warnika, former BPMIGAS Chairman, who was appointed by the government as team member to renegotiate gas prices.

Kardaya said that under the price formula that was tide to $118 per tonne HSFO, Block B gas only fetched 2.5 per MMBTU. ?That price is far lower that current domestic gas price of $4-5 per MMBTU based on new contracts,? he said, adding that Indonesia would want export gas price at least similar to domestic price.

ConocoPhillips has contract to supply some 250MMCFD of gas to Petronas in Malaysia for 20 years starting 20002.

Kardaya said government will also try similar attempt to increase LNG prices from BP-operated Tangguh LNG project in West Papua to China and South Korea. ?Tangguh LNG price to Fujian, China is based on crude ceiling price of $38 per barrel and $25 per barrel to South Korea?s SK and Posco. Indonesia will definitely want better price in the light of $130 per barrel crude,? he said, adding that a team would leave for China next week to try renegotiating the price.

Tangguh is contracted under long term deal to supply 2.6MTPA of LNG to CNOOC?s receiving terminal in Fujian and South Korean firm SK Corp and Posco would jointly buy 1.1MTPA of LNG from Tangguh. (godang)