Kansai Electric asks for LNG volume reduction

Indonesian upstream oil and gas authority BP Migas said that Japan utility firm Kansai Electric Power Co.Inc. had signaled that it would ask for a reduction in LNG contract volume due to decreasing business volume.

“Kansai had formally asked for a contract volume reduction, but it had not yet come with the exact volume," BP Migas deputy in charge of LNG marketing Eddy Poerwanto told Petromindo.Com on Tuesday. Eddie said Kansai cited tight competition in Japan's deregulated electricity market and decreasing business volume as reason for the supply cut request.

Kansai Electric has 2.56 million tons per annum of LNG supply contract with Arun and Badak, which will expire in 2010 and another 0.91 million tons per annum contract with Bontang, which will expire in 2011.

Eddie said both BP Migas and Kansai are still discussing the way out. “One of the possibility is to cut the volume but extend the contract,” said Eddie.

The request came amid Indonesia’s effort to win 12 million tons PA LNG supply contract extension with Japanese LNG consumers, including Kansai Electric. (alex)