Pertamina, Japan LNG buyers agree to lower price, extend contracts

State oil and gas company and a number of Japan liquefied natural gas (LNG) customers known as western buyers, on Friday had signed an agreement to extend LNG contract for another 10 years in exchange for lower LNG price for current contract, according to Minister of Energy and Mineral Resources Purnomo Yusgiantoro.

Western LNG buyers, which absorb most of Pertamina?s LNG export to Japan had been asking for price reduction for their current contracts because they were having problems in marketing their gas in Japan due to the country?s liberalization of its gas industry.

Pertamina had responded positively to their request provided that they extend their LNG sales contracts, which would expire between 2003 to 2010.

Purnomo said the volume of the contract extension was still being negotiated between involved parties. Purnomo did not disclose the price reduction for the current contract.

Indonesia, the world?s largest LNG exporter, now has two LNG centers, respectively located Arun, Aceh and Bontang, East Kalimantan with Japan absorbing 67 percent of total production. Indonesia produced 27.3 million tons in 2000.

The third LNG center is scheduled to become onstream in Tangguh, the easternmost province of Papua with the annual capacity of 3 million tons per annum.

Osaka Gas, Kansai Electric Power & Co, Kyushu Electric and Chubu Electric are among companies grouped as western LNG buyers. (alex/godang/robert)