Pertamina ready to offer lower LNG price, greater flexibility to stay competitive

State oil and gas Pertamina on Friday hinted that it was ready to adapt with current LNG market trend which demands lower prices, greater flexibility and shorter contract terms in dealing to win new contracts or contract extensions.

?The market is changing, and we must either adapt to it or risk losing the market,? said Pertamina downstream director Muchsin Bahar.

A team of Pertamina officials is in Japan -- with whom Indonesia has an 8.4-million-tonne contract that expires in 2010 and a 3.6 million tonnes deal, which ends in 2011 -- and plans to travel on to South Korea. Pertamina had been given right by BP Migas to sell LNG to Japan.

Muchsin admitted that low LNG contract prices made by Tangguh and NorthWest Shelf (NWS) in selling their LNG to China last year would likely be the benchmark for next round negotiation in Japan and South Korea.

On Thursday Bloomberg reported that Tokyo Gas, world?s No.3 LNG buyer, had already stated intention to use Tangguh and NWS LNG contract prices as benchmark in negotiating to buy LNG from Russia.

Indonesia is the world's biggest exporter of LNG, with more than 23 million tonnes annually going to Japan, South Korea and Taiwan.

Pertamina also has an annual contract for 2.3 million tonnes of LNG with South Korea, which the state firm said was due to end in 2007. (alex/godang)