Purnomo warns against signing Donggi-Senoro LNG deal

Minister of Energy and Mineral Resources Purnomo Yusgiantoro warned on Monday PT Donggi-Senoro LNG (DSLNG) against signing sales appointment agreement (SAA) with any LNG buyers, citing the ongoing dispute with PT LNG Energi Utama (LEU).

"I asked BPMIGAS not to sign SAA until the dispute with LEU is solved. We've heard that LEU has reported the case to KPPU (anti-monopoly watchdog)," Purnomo said.

"Furthermore, we have yet to be briefed about Pertamina's report to BPMIGAS on the project. We have to prioritize the domestic demand that is the conversion of gas into fertilizers. Pertamina has yet to include it in its plan," Purnomo said.

LEU is the Indonesian subsidiary of Australian firm LNG Limited.

Last year, the firm reported sate owned oil and gas firm PT Pertamina and PT Medco E&P Indonesia to KPPU on charges they did not make good their promise to appoint LEU as the operator of Donggi-Senoro LNG project and instead appointed Japanese firm Mitsubishi Corp to operate the project.

Pertamina, Medco and Mitsubishi have set up a consortium called PT Donggi-Senoro LNG to build an LNG plant in Central Sulawesi with Mitsubishi as the developer and the gas sourced from Pertamina and Medco's gas fields.

LEU said it had signed exclusivity agreement with Pertamina and Medco in 2005 to build an LNG plant in Luwuk with gas supplied from Pertamina and Medco?s fields.

But, Pertamina and Medco later appointed Mitsubishi as operator of the LNG plant after holding a beauty contest.

Last week, Lukman Mahfoedz, the president director of PT Medco E&P Indonesia, said DSLNG had signed heads of agreement (HoA) with Japanese firms Chubu Electric Power Co. Inc. and Kansai Electric Power Co. to supply each of them with one million ton of LNG per year for 15 years starting 2012.

?The HoAs were signed end of February. We have reached agreement on prices,? Lukman said. (Bernard)