Tangguh renegotiation starts in January: Kalla

Tangguh LNG price re-negotiation with China will start in January 2009, when a team led by Coordinating Minister of Economic Sri Mulayni will visit China, Vice President Jusuf Kalla said on Monday as quoted by media.

Tangguh renegotiation would be included in part of broader economic and energy cooperation between the two countries, Kalla said after a meeting with China Deputy Prime Minister Li Keqiang.

BP-operated Tangguh is contracted to supply 2.6MTPA of LNG to CNOOC?s receiving terminal in Fujian under long-term contract that would start next year. Under the deal, pricing formula is linked to crude price capped at US$38 per barrel, which, according to the government could cause heavy losses to Indonesia when crude price is high.

Indonesia wants price cap to be relaxed so that pricing formula would reflect LNG market price. (*)