Pertamina says Indonesia ready to compete with Russia in LNG market
Wednesday, June 11 2003 - 04:00 AM WIB
?We are ready to compete with Sakhalin-2,? Pertamina downstream director Muchsin Bahar said recently.
Shakalin-2 is the name of Russia?s first LNG project being developed on Sakhalin Island by a consortium of British-Dutch oil giant Royal Dutch/Shell and two Japanese traders, Mitsui & Co. and Mitsubishi Corp.
Japanese buyers are reportedly interested in the Shakalin project due to its proximity to Japan.
Tokyo Electric Power Co. and Tokyo Gas Co., the world?s second and third largest LNG buyers which so far have bought LNG from Indonesia, last month became Sakhalin-2 project?s first two customers by agreeing to buy a combined 2.3 million tons a year starting in 2007, less than the Sakhalin project capacity of 9.6 million tons.
Meanwhile, Indonesian government officials and those from Pertamina are still in talks with LNG buyers from Japan in a bid to secure extension of supply contracts. More than 12 million tons per year of Indonesian LNG contracts to that country will expire in 2010.
Japan is the largest importer of Indonesian LNG, which come from Bontang, in East Kalimantan province, and Arun, in Aceh. Other buyers of Indonesian LNG are South Korea and Taiwan.
Several of the Japanese buyers had expressed interest to renew their LNG contracts with Indonesia. Minister of Energy and Mineral Resources Purnomo Yusgiantoro said, however, that pricing was the most crucial issue in negotiations with the Japanese buyers.
Japanese buyers indicated that they would extend their LNG contracts if Indonesia agreed to reduce prices to the level set for Tangguh LNG in Papua province, and to the price level set by North West Shelf Australia LNG Pty.
Indonesia last year signed a long-term contract to supply LNG from Tangguh to China?s Fujian province. (godang)