Pertamina does not want contractors to co-sign LNG contracts

State oil and gas company Pertamina and production sharing contractors have yet to reach an agreement over several terms and conditions for the appointment of the state firm as the single seller of LNG to Japan, South Korea and Taiwan, Bisnis Indonesia reported on Thursday.

"One thing which remains unacceptable for Pertamina is a proposal from the contractors that they may co-sign the LNG contracts," the paper quoted Pertamina's downstream director Harry Purnomo as saying recently.

As Pertamina had been appointed by the government as the single seller to the three markets, contractors should allow the state firm handle all business negotiations, he said.

"Everything has been given to Pertamina. Why do they still want to co-sign the LNG contracts," Harry asked.

Harry also dismissed as "groundless" contractors' worries that Pertamina would prioritize its LNG over contractors' LNG in its marketing campaign.

"Contactors have larger gas reserves and funds. Thus, they don't need to worry that Pertamina will first offer its LNG. This is a matter of trust. Does contractors have a trust in Pertamina to sell their LNG to the traditional markets?," Harry said.

A source also said Pertamina and contractors have also yet to reach an agreement on who will pay compensation in case of supply defaults.

Despite the remaining disagreements, chairman of upstream authority BP Migas Rachmat Sudibyo believed that both parties would reach an agreement on all the terms and conditions soon. (*)