Indonesia to sell LNG to Jiangsu Province: Chinese media

Indonesia is planning to export liquefied natural gas to eastern China's Jiangsu province, China's state media was quoted by Dow Jones Friday.

Officials from Indonesia and China have held negotiations on the LNG export program and the two countries are expected to sign a memorandum of understanding soon, China Radio International reported, citing Rachmat Sudibyo, chairman of Indonesia's oil and gas upstream authority.

The report didn't give further details.

If signed, it will be the second LNG supply deal between Indonesia and China.

Previously, Indonesia signed a contract with China to sell 2.6 million tons of LNG a year from 2007 to the southeastern province of Fujian from the BP PLC -led Tangguh LNG development project in Indonesia.

China-based industry officials said China is likely to build an LNG terminal in Jiangsu's Nantong city, north of Shanghai city, to accommodate the LNG imports from Indonesia.

They said the terminal is only at the initial planning stage.

PetroChina Co. , China's largest oil and gas company, signed a letter of intent at the end of 2001 with the local Jiangsu government to proceed with the construction of the terminal.

They said PetroChina is interested in Jiangsu because of its dominant presence in the gas markets there.

PetroChina will begin commercial sales of natural gas next year from a 3,900- kilometer pipeline in the northwest to eastern provinces and cities, including Jiangsu.

The imported LNG will supplement PetroChina's supplies of natural gas sent via pipeline, they said.

Another official said the government is unlikely to approve the terminal construction or the export program before China's first LNG terminal starts operation in southern China's Guangdong province in 2006.

"The government wants to see that the Guangdong project is a success before proceeding with other similar projects," he said.(*)