Pertamina says talks with Japan LNG buyers "positive"

Indonesia's state oil company Pertamina has had positive talks with Japanese buyers about selling them more liquefied natural gas (LNG) contracts, including possible shipments from the giant Tangguh field, a senior official said on Friday.

Indonesia is struggling to market more LNG to Japan and expects Japanese buyers to also renew contracts covering some 12 million tonnes in annual shipments that will expire in 2010-11.

Tangguh in Papua province, to be operated by BP, will come on stream in 2007 when it begins supplying 2.6 million tonnes a year to a planned terminal in China's Fujian province.

"Our team has had positive talks in Japan and we will have more talks with other Japanese buyers. We offered two million tonnes of LNG (each year) from Tangguh and we also talked about extending contracts from 2010," Pertamina President Director Baihaki Hakim told reporters.

"The Japanese buyers have indicated they want to buy more from Indonesia. They also expect cheaper prices compared with current contracts."

A Pertamina official has said an annual contract for 8.4 million tonnes of LNG with Japan expires in 2010 while another 3.6 million tonne deal will end in 2011.

Pertamina and BP will build two LNG plants in Tangguh, with combined capacity of between six to seven million tonnes a year.

"We will give priority to market LNG from Tangguh in Japan or elsewhere. But we want also to seek contract extensions with Japan," Baihaki said.

Indonesia has been exporting more than 23 million tonnes of LNG each year, mainly to Japan, South Korea and Taiwan.(*)