SKK Migas wants market price for Fujian LNG
Monday, February 17 2014 - 11:28 AM WIB
Upstream authority SKK Migas wants the new price of the Tangguh LNG for the Fujian LNG terminal is equal to the current export price.
Widhyawan Prawiraadmadja, SKK Migas? Deputy for Commercialization Control, said at present LNG is sold on the international market at the slope of 14 percent.
Slope is a parameter used in the LNG industry to compare the LNG price with that of crude oil on an energy equivalent basis. According experts, if the slope in an LNG price formula is set 16.7 percent, that means the LNG is valued equal, on an energy equivalent basis, to crude oil. If the slope is less than 16.7 percent, that means the LNG is sold at a discount to oil. If the slope is greater than 16.7 percent, it means the LNG is sold at a premium price to oil.
Furthermore, Indonesia wants the new price is retroactively effective since January 2013. China, meanwhile, wants the new price to be effective since January 2014.
?The negotiation is in progress. The Chinese party has thus far not yet offered a price proposal,? he said.
The Indonesian renegotiation team headed by Vice Minister of Energy and Mineral Resources is leaving for China this week to resume renegotiation with the Chinese to revise upwards the price of Tangguh LNG for Fujian.
Editing by Johannes Simbolon