ASEAN KEY DESTINATIONS
Indonesia’s LNG project coming on stream early 2009
Indonesia's $5 billion Tangguh liquefied natural gas (LNG) project, due to be commissioned before year-end, will be on stream early next year, Reuters quoted Minister of Energy and Mineral Resources Purnomo Yusgiantoro as saying Tuesday.
"It will be on stream in early 2009 and the new sales contracts will start late in the first quarter," Yusgiantoro said on the sidelines of an LNG conference organised by Conference Connection.
He did not say whether this meant the formal commissioning of the 7.6 million tonne per year Tannguh project, operated by BP, would be delayed from the end of this year.
Indonesia, until recent years the world's biggest LNG exporter, is counting on Tannguh to help offset declining production at older projects, boosting export earnings.
Earlier this year, as oil prices surged to record highs above $147 a barrel, officials suggested that Indonesia might delay deliveries from the project to China and South Korea in order to negotiate higher prices.
Indonesia had closed the Tangguh LNG deals some five years ago at the equivalent of $25 a barrel, later revised up to $38 a barrel, but still far from oil's July peak at over $147, when prices of the gas chilled to liquid form also surged.
In March, Indonesia said it would ask China National Offshore Oil Corp (CNOOC) to increase its LNG price from Tangguh again, but there has been no agreement yet and Yusgiantoro said there was no hard deadline for the discussions.
"We have no exact target, what really want is the extension of the contract but it takes two to tango," Yusgiantoro said. Asked whether they would halt exports if the contracts hadn't been renegotiated, he said: "The average price from the project to South Korea, the U.S. and China is still pretty good at about $8 per mmBtu fob, we have some low prices, some high prices."
Tangguh has contracts to supply 3.5 million tonnes a year to Sempra Energy, 2.6 million tonnes to China's CNOOC and 1.1 million tonnes to South Korean buyers K-Power and POSCO.