LNG Ltd. concerns over decision to grant LNG project to Mitsubishi

Australian firm Liquefied Natural Gas Limited has sent ?letters of concern? to Pertamina and JSX-listed oil, gas company PT.Medco Energi Internasional Tbk. over media reports on their decision to select Japanese firm Mitsubishi Corp. as developer of the proposed 2MTPA LNG plant in Central Sulawesi.

LNG Limited in 2005 had signed the so called ?Exclusivity Agreement? (EA) with Pertamina and Medco where LNG would build LNG plant in Central Sulawesi with gas to be supplied from Matindok gas fields, which are jointly owned by Pertamina and Medco.

Pertamina and Medco, however, later changed mind and decided to hold tender to find developer of the proposed LNG plant and also the offtaker for the LNG produced.

Some 12 bidders have initially submitted their proposals, including LNG Limited, which teamed up with Osaka Gas. Pertamina and Medco in December 2006 said they have picked Mitsubishi as developer and negotiation is now ongoing.

LNG Limited said thus far it has yet received formal notification about Mitsubishi?s appointment.

?The company is maintaining active presence in Jakarta?..and will continue to monitor developments and progress its concerns, with Pertamina, Medco and the government of Indonesia, as to the nature of the selection process; significant time and funds expended by the company in good faith, based on commitments to the May 2005 EA and to the apparently significantly higher capital costs and longer development schedule (relative to the company?s proposal) as communicated in media reports,? the company said.

Pertamina Vice-CEO Iin Arifin Takhyan said December 2006 interview that the plant would cost US$600-800 million and would be completed in late 2009. Pertamina and Medco will have 20 percent stake each in the LNG plant, Iin said.

The company said that during the ?holding period?, it had also been reviewing other opportunities within Indonesia using the substantial development and engineering work earlier undertaken in Central Sulawesi LNG project. The company said the technology could readily be applied to other onshore LNG projects; resulting in fast track monetization of existing proven gas resources. (alex)