Tangguh LNG renegotiation with China to resume: Kalla

The Jakarta Post, Jakarta | Wed, 12/31/2008 10:50 AM  

Despite falling oil prices, the government has insisted on moving forward with a process of renegotiating with China for the price of liquefied natural gas (LNG) from the Tangguh field in Papua for export to the country. 

After being halted for sometime due to the outbreak of the global financial crisis in the third quarter of this year, the government is slated to resume the renegotiation with its Chinese counterpart in January, according to Vice President Jusuf Kalla. 

"We will refresh (the negotiation) in January 2009," Kalla said during his visit to the Tangguh LNG project in Bintuni Bay, West Papua province on Tuesday as reported by Antara. 

When visiting China earlier, Kalla said the Tangguh LNG contract with China would be renegotiated because the position of Indonesia was seen as on the losing side. 

However, he did not disclose any details of what was being offered to China. 

"We will discuss over the formula, not only about price. Negotiations will move forward," he said. 

Kurtubi, an oil and gas analyst, said the renegotiation process of LNG pricing formula for Tangguh had to be taken to the next stage despite the falling oil price to around US$30 level. 

In the 25-year contract for LNG export to China, the price had been set at $2.40 per mmbtu with less adjustment to an increase in crude oil prices. 

The controversial Tangguh liquefied natural gas (LNG) contract was signed by Indonesia and China's Fujian province in 2002 under the administration of then Indonesian president Megawati Soekarnoputri. 

The LNG price at the time of the contract's signing was based on a crude oil price of $20 per barrel. 

The Chinese government had earlier agreed to raise the price to $3.80 per mmbtu but the Indonesian government refused the offer, saying it was still too low. 

The Tangguh gas field is developed by a consortium of BP Plc, (37.16 percent), MI Berau (16.3 percent), CNOOC (13.9 percent), Nippon Oil (12.23 percent), KG Berau/KG Wiriagar (10 percent), LNG JapanCorporation (7.35 percent) and Talisman (3.06 percent). (iwp)