Tangguh has right to divert half of Sempra LNG contract volume

BP-operated Tangguh LNG has right to divert up to 50 percent of its contracted supply volume to Sempra Energy?s Energia Costa Azul LNG receiving terminal in Mexico to other places, a BPMIGAS official said.

BPMIGAS Gas Marketing Division Head Djoko Harsono told Petromindo.Com on Thursday that Tangguh has right to divert up to 50 percent of 3.7MTPA LNG supply to Sempra.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said earlier this month that Indonesia is in talks to divert to Japan some of LNG cargoes that would originally be supplied to Sempra in search of higher selling prices.

BPMIGAS Deputy Chairman in Charge of Marketing Eddie Poerwanto told Petromindo.Com Thursday that Tangguh has not yet engaged in formal talks regarding cargo diversion with Sempra or with Japanese buyers. ?We don?t have any deal in place yet, and there?s no conclusion yet about the number of the cargoes that would be diverted,? he said.

Bisnis Indonesia daily on Tuesday also reported that South Korean gas firm Kogas was also interested to buy the diverted cargoes.

Asian LNG importers are now scrambling to secure LNG cargoes to meet increasing demand amid dwindling supply from Indonesia. According to Bloomberg, Asian importers last year paid about 50 percent more than U.S. benchmark prices to secure LNG from plants as far as Africa and the Caribbean. Japan, South Korea and Taiwan have failed to get their contracted volumes from Indonesia's existing plants as aging fields cut shipments 22 percent from a peak in 1999.

Tangguh is slated to commence shipment to Sempra in late 2008 or 2009 for 20 years. Sempra Energy?s President Darcel Hulse in October 2004 release said that Tangguh has right to divert its cargoes ?in exchange for appropriate compensation for all cargoes diverted.?

Under Sempra's contract with Tangguh, the venture needs to give the U.S. company notice of an intention to divert cargoes and to cover some terminal and pipeline capacity charges, Hulse said in a recent interview with Bloomberg. (godang)