Thailand's PTT bids for Tangguh gas: Official

Ika Krismantari , The Jakarta Post , Jakarta | Thu, 03/06/2008 1:21 AM

Upstream oil and gas regulator BPMigas confirmed Wednesday it was currently reviewing a proposal from Thailand's petroleum authority PTT on the purchase of gas from Tangguh Liquefied Natural Gas (LNG) plant in Papua.

BPMigas chairman Kardaya Warnika said PTT had submitted a bid aiming to top a deal previously signed between the regulator and U.S.-based Sempra.

"So far, PTT offers the best deal, but we are still waiting, should there be a better one," Kardaya said, refusing to mention the price.

The government has decided to review the deal in light of the surging price of LNG in the global market.

A number of other buyers, including from Japan and Korea, have also shown their interest in buying the gas, with each bidding for 1.85 metric tons per annum (mtpa) or almost half the amount poised to be delivered to the U.S. company.

In its latest report, BPMigas said the Tangguh project was ready to produce gas by the end of the year. The plant itself has a total production capacity of 7.6 mtpa and proven reserves of more than 14 trillion cubic feet of LNG.

Under the deal with Sempra, BP Indonesia, the operator of Tangguh LNG plant, would sell the gas to the U.S. company at a price of US$5.94 per million British thermal units (mmbtu) for 20 years.

However, the deal also allows BP Indonesia, with the consent of the government, to divert the gas to other buyers, subject to a "diversion fee".

The sale of gas from Tangguh had drawn protests from analysts and lawmakers who argued the government failed to secure good deals from the gas contracts with an average selling price of $4 per mmbtu.

The government also has deals with other buyers for the Tangguh gas, such as China's Fujian at a price of $3.35 per mmbtu for 25 years, Korea's SK Power at $3.50 for 20 years and Korea's Posco at $3.36 for 20 years.

The lawmakers and analysts claimed the price was too low as compared with the current global price, which recently has been at around $8 to $9 per mmbtu.

BPMigas said earlier that with the gas diversion the government had the potential for additional revenue of $1.75 billion.