Indonesia to be flexible in LNG contract terms

Indonesia will be flexible in making liquefied natural gas (LNG) contracts with Japanese buyers, but it will not go too far to reduce its LNG prices, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said Thursday as reported by Detik.com news website.

“It is very important to maintain flexibility in our contracts with them,” Purnomo told reporters.

Purnomo said that Japanese buyers, which so far had bought LNG from Indonesia under long-term contracts, had planned to also buy the product from other countries.

His remarks came two days after Japanese participants in Monday’s fourth Indonesia-Japan Energy Roundtable said that Japanese buyers wanted a modification of the current terms and conditions of long-term LNG contracts.

Purnomo said Indonesia was willing to reduce LNG prices for Japanese buyers considering the ever-tougher competition with other LNG suppliers. He said, however, that any new prices would be kept at a competitive level.

Meanwhile, the chairman of Upstream Oil and Gas Authority Rachmat Sudibyo said Indonesia was ready to discuss with Japanese buyers to find better contractual terms and conditions in order to accommodate buyers’ preferences.

Indonesia is scrambling to secure contract extension from Japanese buyers since more than 12 million tons per year of its LNG contracts with Japanese buyers will expire by 2011.

The Japanese buyers reportedly prefer short-term contracts after their current contracts expire. (*)