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March 28, 2009

Indonesia may delay Tangguh LNG project again
The first delivery of liquefied natural gas (LNG) from the BP-led Tangguh project in Indonesia's Papua may be delayed beyond an earlier target of May, Reuters quoted Energy Minister Purnomo Yusgiantoro as saying Friday.

Last year, Indonesian officials had said the $5 billion Tangguh project would be delayed until the second quarter of this year, pushed back from a target of early this year.

Priyono, head of the country's oil watchdog, BPMIGAS, said last week the first delivery of two LNG cargoes was set for May and it would be delivered to Fujian, China.

"We may not make first delivery of LNG in May from Tangguh. We may deliver one cargo to Fujian as a test," Yusgiantoro told reporters.

He said Indonesia had sent a team to China to check whether the receiving LNG terminal in Fujian was ready.

"They (China) need one cargo as a test. We can send a cargo from Bontang LNG plant," Yusgiantoro added.

He said Indonesia would not declare that Tangguh was on stream commercially until the receiving terminal in China was ready.

Indonesia, the world's number-three LNG exporter after Qatar and Malaysia, is counting on Tangguh to help offset declining production at older projects.

Tangguh will produce 7.6 million tonnes per year and has a contracts with several companies, including 2.6 million tonnes to China National Offshore Oil Corp.

Buyers of Indonesian LNG had asked for the delay, diversion or cancellation of between 13-15 cargoes this year after the global financial crisis hit LNG demand. Indonesia's traditional buyers are from Japan, South Korea and Taiwan.

Bontang in East Kalimantan is one of only two LNG centres in Indonesia. The Arun plant in Aceh province is the other. Indonesia expects natural gas output to increase by 2 percent this year to 7.56 billion cubic feet per day, with 37 percent due for export via pipelines or in the form of LNG.

Djoko Harsono, deputy head of BPMIGAS, ha said previuosly state-run Korea Gas Corp (KOGAS) had asked to cancel 2 LNG cargoes from Arun and to delay 6 cargoes from Bontang.

KOGAS has a contract for two million tonnes a year that expires in 2014 and another for one million tonnes ending in 2017.

Yusgiantoro also said the government would target more LNG for the local market.


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