INTERVIEW: RI upbeat to win LNG project in Taiwan: Baihaki Hakim
Tuesday, February 13 2001 - 04:30 AM WIB
State oil and gas company Pertamina's president Baihaki Hakim toured South Korea, Japan and Taiwan from Jan. 31 to Feb. 8 to meet Indonesia's liquefied natural gas (LNG) customers. He also looked for opportunities to sell more LNG to Taiwan during the visit. Following are the excerpts of the interview with him on the result of the visit.
Q: What are the results of your visit to Japan, South Korea and Taiwan?
A: In Japan, we only paid some courtesy calls (on our customers). But in Taiwan, we were waiting for the result of the bidding process for an LNG project. Based on some information, it seems that there are only two countries, including Indonesia, qualified to participate in the next steps of the bidding process. They actually want more participants, at least three participants. Today the Taiwanese government is studying whether they will go ahead with the two bidders or review the tendering process. Let's wait for two or three weeks and pray that we shall succeed.
We have to make lobbying on the management level but we need also to assess the market's conditions.
Wherever I went, either to Japan, South Korea or Taiwan, I found that the market demanded greater flexibility. That means the LNG buyers don't want long-term contracts. A five-year contract period is enough. This means that the old scheme for the sale of LNG, which is based on long-term contracts and gives a large control (of the LNG project) to buyers, should be reviewed. That's what they want. They prefer short-term contracts given the competition and deregulation in their country. Competition forces all people to buy LNG at the cheapest price on the most flexible terms of contract.
Thus, the market has changed.
As far as the Tangguh LNG project (in Irian Jaya) we have proposed to the government that the development scheme of the project be modified such a way that it is not buyers but sellers who determine the financing. That means we shall arrange the financing for the project and buyers will remain only buyers. This is a new concept.
Q: What are the benefits of the new concept?
A: The situation has changed. There are many sellers and buyers have many choices. Pertamina and its production-sharing contractors (PSCs) have technological capabilities to develop an LNG project and are able to raise financing for the project. Thus, we have to start doing what other countries have done. We can no longer continue forcing the market to accept the development and payment scheme applied in the Arun and Badak LNG projects, because the market wants a greater flexibility.
As a seller, we shall manage the project. In the past, we only provided gas and they (buyers) managed (the project) and looked for financing (for the project). Today, it is us who should be more active to look for market.
Q: Which country is the strongest rival for Indonesia in selling LNG to Taiwan?
A: Qatar.
Q: Australia is reportedly also interested to sell LNG to Taiwan.
A: Right. Australia is doing marketing efforts and lobbying there. I think it wants to be the third participant in (the next step) of the tender.
Q: Are you optimistic that Indonesia will win the tender?
A: It seems we can win. (godang)