Minister, business leader ?support? Japan LNG contract extension

Chances for a Japanese consortium to have their contracts extended for the purchase of LNG from East Kalimantan?s Bontang plant are increasing as senior minister and a business leader have voiced supports to such extension.

Minister of Industry and Trade Fahmi Idris, who is well known for its nationalistic policy, said on Thursday that he could accept extension of the contracts as long as the contracted volume was less than the amount set in the current contracts.

?We have to honor the contracts and can understand their extensions. What is important is that the contracted volume in the renewed contracts is not as much as the current one,? Fahmi said.

A consortium of six Japanese companies, that is Kansai Electric, Osaka Gas Co., Chubu Electric Power Co., Kyushu Electric Co., Toho Gas Co. and Nippon Steel Corp., has two contracts with Pertamina for the supply of 12 million tons per annum (MTPA) of LNG from the Bontang LNG plant that are due in 2010 and 2011.

The companies supported by the Japanese government are pushing state oil and gas company PT Pertamina, which is assigned by the government to handle the country?s LNG marketing, to extend their contracts to supply a total of 6 MTPA - half of the current contracted volumes - after 2010 and 2011.

According to governmental officials, Japan has set the LNG contract extension as a prerequisite for the signing of the Economic Cooperation Agreement (EPA) between both countries. President Susilo Bambang Yudhyono will go to Japan for a state visit later this month, during which he is expected to sign the EPA.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro has indicated that the government would most likely approve of the extension of the contracts with the six-strong consortium.

However, Vice President Yusuf Kalla recently said he would prefer that the gas in East Kalimantan, that is currently supplied to East Kalimantan?s Bontang LNG plant be pipelined to Java in the future.

Meanwhile, MS Hidayat, head of the Indonesian Chamber of Commerce and Industry (Kadin), said he would support the extension of the contracts on the condition that Japan would give Indonesia economic helps in return.

?We want ?take and give?. They (Japan) need our gas. We shall ask them to make investment in Indonesia, such as in biofuel and infrastructure projects,? Hidayat said. (Godang)