SBY unlikely to sign LNG deal in Japan: Pertamina

President Susilo Bambang Yudhoyono is unlikely to sign an LNG deal with Japanese government or buyers during his visit to the country later this month as negotiation between state oil and gas company PT Pertamina and Japanese buyers remain at standstill.

?Talks with Japan (on the extension of LNG contracts) have collapsed. It is impossible that our president will sign an LNG deal during his visit the country. At most, he will only sign a letter of intent (LOI) or a memorandum of understanding (MOU),? Pertamina?s President Director Ari H. Soemarno said on Wednesday.

Several contracts involving the export of 12 million tons per year of LNG from Indonesia to Japan are due between 2010 and 2011. After years-long negotiation on the extension of the contract, during which Japanese buyers insisted on a discount on the LNG price, Pertamina decided to suspend the talks early this year. The move has forced Japan to scramble to find new LNG supplies amid tight market.

?There is a strong pressure from the Japanese side on us to resume the talks,? Ari said.

Susilo is scheduled to sign a bilateral economic partnership agreement (EPA) on his incoming visit to the country.

Kyodo News Agency earlier reported that the Japanese and Indonesian governments plan to include a deal under which Indonesia will ensure stable energy supply to Japan.

The energy deal is eyed in exchange for more investment from Japan in oil and natural gas-development projects in Indonesia, the news agency reported, quoting anonymous Japanese officials. The news agency however did not specify if the energy supply means LNG supply from Indonesia but Indonesia is among the largest exporters of LNG to Japan.

A senior governmental official earlier told Petromindo that Japan will make stable LNG supply as one condition for possible free trade agreement between the two countries.

?SBY will likely bow to Japanese pressure,? the official said, referring to the president.

Meanwhile, Ari called on the government to clarify the firm?s position in the country?s LNG industry as the company continues handling the marketing of Indonesian LNG but have got no fee for the service.

?Our request for LNG management fee has thus far got no response,? Ari complained. (Alex).