Kogas gets Tangguh LNG diversion

Upstream oil, gas authority BPMIGAS said that BP and South Korean gas firm Kogas had reached deal to divert some of the LNG volume that would have been shipped from the Tangguh LNG project to Sempra Energy?s receiving terminal in Mexico.

Deputy Chairman Eddy Purwanto told reporters on Wednesday that Kogas would offtake ?less than one million tonnes per annum? at US$20 per MMBTU under the $100 per barrel of oil assumption. He did not give detail about the length of the offtake contract, adding that the deal is expected to be finalized soon.

BP-operated Tangguh LNG is contracted to supply 3.7 million tonnes of LNG starting 2009 to Sempra?s receiving terminal in Costa Azul, Mexico. Under the contract, Sempra would pay the Tangguh LNG based on Southern California (Socal) index price. BP could divert half of the volume of LNG by paying $1 per MMBTU premium to Sempra.

Eddy said talks has also been ongoing to divert the remaining volume of LNG that could be contracted with companies such as Thailand?s PTT and Japan?s Tokyo Gas and Tohoku Electric. He also opened possibility to divert the LNG to domestic users.

Tangguh LNG project, which is located in West Papua province, will start LNG production by the end of this year. The plant itself has a total production capacity of 7.6 MTPA and proven reserves of more than 14 trillion cubic feet of LNG.

Other than Sempra, Tangguh will supply 2.6 MTPA of LNG to CNOOC?s Fujian LNG terminal, 1.1MTPA to South Korean companies SK Corp and Posco and 120,000 tonnes per annum to Japan?s Tohoku Electric.

Eddy said that talks to renegotiate LNG prices aith CNOOC, SK Corp and Posco are currently ongoing with finalization expected by year end. He said that Indonesia wanted the ?best price? for its LNG and is ready to delay shipments until the price renegotiation is completed.

?Indonesia would not breach any contract. If there?s is any penalty for the delay or cancellation as stated in the contracts, we?ll pay,? he said.

On Tuesday, Eddy said Indonesia wanted at least $6 per MMBTU for Tangguh LNG that would be shipped to China and South Korea, which is more than 75 percent increase than previously agreed prices.(godang)