Korea Gas Corp (Kogas) has proposed an extension to the liquefied natural gas (LNG) supply contracts from Indonesia, that expire in 2014 and 2017, Energy and Mineral Resources Minister Purnomo Yusgiantoro said Wednesday.

"Korea was asking to extend LNG export contracts, but at this time we cannot make any commitment as we also want to secure domestic needs first," said Purnomo after attending a closed-meeting with Lee Youn Ho, South Korea's Minister of Knowledge Economy on Wednesday.

Kogas receives a total of 2 millions tons of LNG a year from Arun and Bontang LNG plants, according to data from upstream oil and gas regulator BPMigas.

To boost gas availability to the Bontang plant, the government is counting on supply from the recently approved Chevron Corp.'s new deep-water fields off East Kalimantan, which are expected to start producing by 2014, at the earliest.

"But, the gas from these fields must be very expensive, because these are deep-water fields," Purnomo said, saying that such projects were more difficult and therefore more expensive.

Purnomo pointed to the planned extension of the LNG export agreement with Japan as another reason why the government could not provide immediate answers to the request from Kogas.

Indonesia is preparing to sign an agreement to extend its LNG export contract to Japan. Under the existing contract, which will expire by March 2011, Indonesia supplies 6 million tons of LNG to Japan.

The contract will be extended for 10 years, but the supplied volume will be reduced to 3 million tons a year for the first five years and 2 million tons a year for the remaining five years.

In July, Kogas agreed to buy (LNG) from the Tangguh project at a record price of US$20 per million British thermal units (mmbtu).

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