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NEWS UPDATES 20 May 2009

Total to sign final deal with Japan to supply LNG from Indonesia

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A unit of France's Total plans to sign a final deal to supply liquefied natural gas (LNG) from Indonesia's Bontang plant to Japanese buyers next month in Bali, an energy watchdog official was quoted by Reuters as saying Tuesday.

Total is the biggest natural gas supplier to the Bontang LNG plant, in East Kalimantan, with daily output of about 2.5 billion cubic feet per day.

"We have reached an agreement with the Japanese buyers and we will sign a final deal next month in Bali," Priyono, the chairman of the watchdog, BPMIGAS, told reporters.

Indonesia has agreed to extend the contract with Japanese firms from 2011 for 10 years. Under the agreement, the buyers will purchase a total of 3 million tonnes per year (tpy) of LNG from 2011 to 2015 and 2 million tonnes from 2015 to 2020.

The Japanese companies involved are Osaka Gas Co, Chubu Electric Power Co, Kansai Electric Power Co, Kyushu Electric Power Co, Nippon Steel Corp and Toho Gas Co.

"The signing is between France's Total and the Japanese firms. The government will witness the event," Priyono said.

Indonesia, the world's third-biggest LNG exporter after Qatar and Malaysia, currently has an 8.4 million tpy contract that expires in 2010 and another 3.6 million tpy deal expiring in 2011.

Another official at the energy watchdog said the LNG price was linked to Japan's crude cocktail price.

"The price will certainly be better than before," said the official, who declined to be identified.

Priyono also said the government would witness the signing of a final LNG supply deal between BP and Korea Gas Corp (KOGAS) next month in Bali.

Indonesia agreed in July last year to sell about 900,000 tpy of LNG to KOGAS between 2010 and 2012. The price will in line with the contract extension between Indonesia and Japanese buyers.

The LNG for KOGAS will be sourced from the Tangguh project, part of supplies diverted from U.S. firm Sempra Energy.

Sempra has a 20-year contract to lift 3.6 million tpy of LNG from the 7.6 million-tpy Tangguh project, led by BP. It has the right to divert half its volumes to customers other than its own new terminal in Mexico.

The Tangguh project is due to start delivery of LNG at the end of June, according to energy minister Purnomo Yusgiantoro.

Indonesia's LNG output is forecast to drop to 349 cargoes in 2009 from 359 cargoes a year ago.


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