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February 15, 2009

Indonesia, Japan sign gas sales extension
Indonesia and Japan have agreed on the gas sales extension for 10 years, the Jakarta Post reported on Saturday.

The signing of the initial agreement was conducted Friday in Osaka, Japan, which could soon be followed up by the signing of the final contract, said upstream oil and gas regulator BPMigas Chairman Raden Priyono in a statement.

The chairman said that, under the agreement, six Japanese firms will get an extension of Liquified Natural Gas (LNG) sales from 2011 to 2020. The six Japanese companies are Chubu EPC, Kansai EPC, Kyushu EPC, Nippon Steel Co, Ltd, Osaka Gas Co, Ltd, and Toho Gas Co, Ltd.

Total sales commitment under the contract is 25 million tons with 10-year term, which will be supplied from the Bontang plant in East Kalimantan. The Bontang plant will get its supply from theMahakam block, which is operated by Total Indonesia, the Jakarta Post quoted him as reporting.

Indonesian state oil and gas firm PT Pertamina and Japanese Inpex Corporation also took part in the signing.

For the first five years, three million tons of LNG will be shipped to Japan per year with two million tons being transported under CIF (Cost Insurance Freight) and another one million tons under FOB (Free on Board).

For the second five years, two million tons of LNG will be delivered per year with one million tons being transported under CIF and the other one million under FOB.

Friday's initial agreement will soon become a final contract. The new contract will then replace the existing 25-year-contract when it expires in 2010.

Under the existing contract, Indonesia supplies 12 million tons of LNG to Japan per year.

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