New team formed to renegotiate LNG contract with China

The government will establish a new team to renegotiate the contract of liquefied natural gas (LNG) sales from the Tangguh LNG plant in West Papua to Fujian, China, Kontan reported on Wednesday.

?The team will be chaired by somebody from upstream oil and gas regulator BPMIGAS,? Evita Legowo, the director general of oil and gas at the Energy and Mineral Resources Ministry, said in Jakarta on Tuesday.

The main task of the new team would be to persuade China to return to a negotiation table so that the price of the LNG to be sold to the country could be reviewed, she said.

She admitted however chances were small for Indonesia to persuade China to the renegotiation table because of a clause in the contract saying the contract could only be reviewed every four year.

The contract which was signed in 2002 was last reviewed in 2006.

Evita said she still had no ideas about who will become members of the renegotiation team, because "the decree has not yet been done."

The previous renegotiation team was chaired by former BPMIGAS chairman Kardaya Warnika.

The Fujian contract has been raising controversies following a recent statement by Vice President Jusuf Kalla that it is one of the worst oil and gas contracts ever signed by Indonesia. Jusuf recently went to China to ask the country?s leaders to review the contract. He also called for an investigation into people involved in the process to obtain the contract.

Indonesia signed a contract in 2002 to supply China's Fujian province with 2.6 million tons per year of LNG from the Tangguh LNG plant for a period of 20 years starting next year. (*)