The Selling Contract Of Tangguh Gas To China Govt

Translated from the Indonesian language

JAKARTA

Selling price to China is cheaper than domestic gas prices.

The government will hold back to renegotiate the Tangguh gas sales contracts in Papua this year. Next week, a proposal contract negotiations with buyers from China will be submitted to the Minister of Finance.

"This week we completed the internal review," said Deputy Chief Executive Agency for Upstream Oil and Gas (BP Migas), Hardiono, yesterday.

Tangguh gas sold to Fujian, China, at a price of U.S. $ 3.5 per MMBTU for 25 years. The price was considered too low for liquid natural gas prices today are about U.S. $ 12. In accordance with the contractual agreement of sale, contract renegotiation conducted every four years.

In 2009, the government set up a negotiating team headed by Coordinating Minister for Economic Affairs at the time, Sri Mulyani Indrawati. However, as Sri Mulyani quit the cabinet in 2010, the team has not managed to renegotiate gas price in China.

According Hardiono, the team formed by the government until now has not been officially disbanded. The government, he said, needs to form a new team to launch negotiations with China. Currently, BP Migas only a work team and give suggestions.

BP Migas Team, said Hardiono, would lobby China on the upper limit of the reference price agreed upon in 2006. Agreed prices associated with oil price of U.S. $ 38 per barrel or U.S. $ 3.35 per MMBTU. "If it can be adjusted with market prices, or increased slightly so that the price of gas is more economical."

The target, with the renegotiation this time, the price could rise to about U.S. $ 5-7 per MMBTU.

"At the very least, the export price is cheaper than the domestic selling price," said Hardiono.

Interest in domestic gas liquids from coming too, such as PT Pertamina (Persero) and PT PLN (Persero). PLN dare to buy gas in the price range of U.S. $ 9 per MMBTU. Meanwhile, Pertamina's bid price up to three times higher than China's current purchased.

A spokesman for PT Pertamina (Persero), Mochamad Harun, said that his party interested in buying the Tangguh gas by 1.5 million metric tons. Amount from the total 2.6 million metric tons of gas that is sent to China every year.

The gas will be used to supply a Floating Storage and Regasification Unit (FSRU) in Jakarta Bay. The facility is targeted to begin operating next year with a total purse capacities of 3 million metric tons per year.

Earlier, Director General of Oil and Gas Evita Legowo said the government will form a new team to renegotiate the Tangguh gas contracts. "No later than March," he said.

ALI NY | GUSTIDHA BUDIARTIE
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