SBY, Hu Jintao to discuss Tangguh gas contract

The Jakarta Post ,  Jakarta   |  Thu, 10/23/2008 9:29 AM  |  World

President Susilo Bambang Yudhoyono will meet his Chinese counterpart Hu Jintao to renegotiate a gas export deal Thursday morning, Antara news agency reported.

The controversial Tangguh liquefied natural gas (LNG) contract was penned by Indonesia and China's Fujian province in 2002 under the administration of then Indonesian president Megawati Soekarnoputri.

The arrangement called for Tangguh field to begin supplying LNG to Fujian in 2009 for a period of 25 years, but has been criticized for stipulating a fixed LNG selling price, rather than a progressive rate, which is commonly used in gas deals to ensure selling rates remain consistent with fluctuating global prices.

Under the contract, the price of LNG has been pegged at US$2.40 per million British thermal units (MMBtu).

The government recently set up a ministerial team supervised by Vice President Jusuf Kalla to renegotiate the selling price.

Tangguh is a massive project located in the Bintuni Bay area in Papua, where total proven gas reserves amount to some 14.4 trillion cubic feet.

Operated by Europe's largest oil and gas company BP Plc., the Tangguh plant is expected to produce 7 million tons per annum in the first phase of production scheduled to begin in 2009. (amr)

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