LNG export guarantees already stated in contracts

The government will have to provide compensation to buyers of liquefied natural gas (LNG) produced by the Tangguh gas fields in case of supply disruption caused by changes in government policy, the Koran Tempo daily reported on Friday.

The paper quoted sources as saying that the compensation arrangement is stipulated under the existing contracts with the LNG buyers.

Changes in government policy that would affect the contract of BP Indonesia in operating the Tangguh gas field in Papua could potentially disrupt the LNG supply to the buyers.

The export contracts signed with several overseas buyers such as Posko and K-Power of South Korea, Sempra of the United States and Fujian of China will expire in 2027, while the contract awarded to BP Indonesia to operate the gas field will already end in 2017.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said recently that the LNG supply to overseas buyers from the Tangguh field would be continued even if the production sharing contract signed with the operator of the gas field would expire ahead of their export contracts with the buyers.

He acknowledges that there is a growing concern from several overseas buyers that the LNG supply from the gas field will be stopped if the production sharing contract with the gas field's operator BP Indonesia is not extended.(*)