Mitsubishi wants upstream stake at C. Sulawesi LNG project

Japan?s Mitsubishi Corp. is asking Pertamina and Medco for upstream stake at Central Sulawesi gas blocks, from where gas would be supplied to the proposed Mitsubishi-led LNG project, a Medco official said.

?Talks are still ongoing, but no decision has been made so far,? Medco Director Rashid Mangunkusumo told Petromindo.Com on Monday, but declined to reveal the percentage of interest the Japanese company was asking. He also hinted that a number of companies have also expressed interested to acquire interest in the block.

Medco and Pertamina hold equal interest in Senoro-Toili block, while Pertamina has 100 percent interest in Donggi block. Gas from both blocks will be used as feed to the Donggi LNG project, which is designed to have capacity of 2-2.5 million tonnes per annum. Both block have combined certified reserves of 3.7 TCF.

?Hopefully we can sign final deal by the end of the year to allow construction to commence the following year,? said Rashid. He also said that currently, drilling program in Senoro-Toili was halted pending finalization of the deal.

A Pertamina source, who declined to be named, told Petromindo.Com that Pertamina is asking to increase stake at the LNG project, which will be come the first LNG project in Indonesia to operate as downstream industry, to 29 percent. ?Pertamina wants to Mitsubishi to decrease ownership from 60 percent to 51 percent, while Medco?s stake at the LNG project would remain 20 percent,? said the source, confirming that the parties are also in the process of negotiating gas sales agreement.

Under the downstream scheme, gas would be paid through the netback scheme, where gas producers will receive actual LNG price sold minus costs and margin. Mitsubishi will offtake all production from the project.(godang)