SK drops plan to buy IDD?s LNG

By Febry Silaban

South Korean firm SK Corp has dropped its plan to buy 1.5 mtpa of LNG or 60 percent of the planned production from the IDD project owned by Chevron Indonesia Company in Makassar Strait.

An industry source said the validity period of the Head of Agreement (HoA) signed by the South Korean firm and Chevron has expired and both made no follow-up.

"SK has sent a letter to Chevron in which it stated that the agreement had expired. Then, Chevron forwarded the letter to SKK Migas (upstream authority). It means that Chevron has to find another buyer," the source told Petromindo.com.

Another source said that state owned oil and gas firm PT Pertamina has been tasked to handle the marketing of IDD?s LNG, including to approach SK to become a buyer. However, until now, SK also has yet to send signals whether it is still interested in buying the LNG.

It was reported earlier in this portal that the South Korean firm has voiced concerns over the price offered by Pertamina for the LNG. According to SK, it had reached agreement on the price of the IDD?s LNG with Chevron when the latter acted as the lead negotiator for Indonesia. The agreed-on price is US$13.9 per mmbtu. Pertamina later joined the negotiation team and even become the lead negotiator. Pertamina raised the price by 30 cents to $14.2 per mmbtu. SK rejected the new price, which prompted Pertamina to send a letter saying ?Take it or leave it?.

Editing by Johannes Simbolon