Purnomo says Japan?s western buyers ready to renew 12 MTPA of LNG contracts

Several Japan liquefied natural gas (LNG) buyers located in the western part of Japan had expressed their intention to renew LNG contracts amounting up to 12 million tons per year, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said.

?On the visit of Indonesian delegation (headed by me) to Japan last week, western buyers had stated intention to buy up to 12 million tons of LNG per year. Other team will leave for Japan shortly to negotiate,? said Purnomo.

Purnomo admitted that one of the toughest issues to realize to sales potential would be pricing, saying that Japanese buyers had signal for price reduction. Purnomo did not give specific detail but analysts said Japan buyers would try to press the price down to match LNG price from Tangguh LNG to Fujian, which reflects 25 percent discount over average Indonesian LNG selling prices to Japan buyers.

Purnomo did not specifically reveal names of the companies who are committed to renew LNG contracts but western buyers group are traditionally referred to as Kansai Electric Power Company, Kyushu Electric Power Company, Chubu Electric Power Company, Osaka Gas, Toho Gas Company, and Nippon Steel.

LNG sales contracts with the volume of 18 million tons per year with several Japanese buyers will expire by 2011, making Indonesia scrambling to find buyers in the increasingly competitive LNG market.

Indonesia is thus far the largest LNG producer from Arun and Bontang LNG plants; shipping more than 23 million tons of LNG a year to power plants and other customers, mostly in Japan, South Korea and Taiwan. The third Indonesian LNG tender, Tangguh LNG is scheduled to come on stream 2007. (godang)