Pertamina reevaluates plan to import LNG from Cheniere

By Febry Silaban

State owned oil and gas firm PT Pertamina (Persero) is currently re-evaluating its earlier plan to import LNG starting 2019 from Corpus Christi Liquefaction LLC, a subsidiary of US-based Cheniere Energy Inc., as oil prices are still below US$50 per barrel, according to an official of Pertamina.

"At the time of the first purchase of LNG from Cheniere, oil price is at around $100 per barrel, certainly it?s very competitive when the LNG will be brought to the domestic (market). But now when oil prices are below $50 per barrel, if that is (still) competitive for Indonesia, we would ship it to the domestic (market)," SVP Gas and Power at Pertamina, Djohardi Angga Kusumah told Petromindo.com.

According to Djohardi, in 2019 there will be a supply deficit of gas or LNG in Indonesia.

"If it (oil price below $50 per barrel) is not competitive, we can do a swap with another player. We have done many swap mechanisms, and we can divert it to other markets, for example, to Asia or Europe," he said.

Pertamina signed an LNG sale and purchase agreement with Corpus Christi in July 2014, under which the company would purchase approximately 0.76 mtpa of LNG upon the commencement of operations of Train 2 of the LNG export facility being developed near Corpus Christi, Texas. This is an addition to the previous LNG sale and purchase agreement of 0.76 mtpa, increasing the total import volume to 1.52 mtpa.

The Corpus Christi Liquefaction Project is being designed and permitted for up to three trains, with aggregate design production capacity of 13.5 mtpa of LNG.

Under the SPA, Pertamina will purchase LNG on a free on board (FOB) basis for a purchase price indexed to the monthly Henry Hub price plus a fixed component. LNG will be loaded onto Pertamina's vessels. The SPA has a term of twenty years commencing upon the date of first commercial delivery of the second train of the Corpus Christi Liquefaction Project, with an extension option of up to ten years. Deliveries from Train 2 are expected to occur in 2019.

In October of last year, Pertamina signed a US$13 billion LNG sales and purchase contract with Cheniere. The contract was signed on the sidelines of a visit by President Joko Widodo in the US.

Editing by Reiner Simanjuntak