Total to sign 4.5MTPA LNG supply deal July

French oil giant Total SA will sign 4.5 MTPA LNG supply deal with Japanese buyers and local consumers in July this year, its Indonesian unit official said on Thursday.

Total E&P Indonesie General Manager Philippe Armand told Petromindo.Com that under the deals, Total and its partner Inpex Corp. would supply 3 MTPA of LNG to a group of Japanese customers called Western Buyers for 5 years, declining to 2 MTPA for the next five years. The deal with Western Buyers would be an extension for contracts that would expire in 2010.

Total would also sign Indonesia?s first ever domestic LNG supply deal, in which the partnership would supply 1.5MTPA of LNG for 10 years to a consortium led by state gas distribution firm PGN. Other members of the consortium are state oil, gas firm Pertamina and state electricity firm PLN. Armand said the contract would start when the consortium complete the construction of LNG receiving terminal to be built in the island of Java.

Gas would entirely be sourced from Mahakam giant gas block operated by Total and processed into LNG at Bontang LNG plant.

Armand said the deal signing would be held in conjunction with the inauguration of Mahakam?s Tunu gas production facilities.

Armand also said that the signing of LNG contracts would smoothen the way for the extension of the Mahakam Block, which will expire in 2017. Total has been trying to get approval to operate the block for another 15 years. Under Indonesian regulation, contractor could be granted extension if it has gas contracts beyond current production sharing contract life.

Mahakam PSC, where Total and Inpex shares equal interest, is currently Indonesia?s gas number one gas producer with production of around 2.6 BCFD and 90,000 barrels of liquids. Mahakam currently supplies more than 75 percent of Bontang LNG plant gas requirement. (alex)