Tangguh renegotiation fails to make progress: Kalla

Alfian ,  The Jakarta Post ,  Jakarta   |  Tue, 05/19/2009 2:50 PM  |  Headlines

Renegotiations with China over the price of liquefied natural gas (LNG) to be exported from the Tangguh field in Papua are at a standstill, Vice President Jusuf Kalla revealed Monday.

Kalla, who initiated renewed negotiations, said the government had yet to make significant progress in the heavily lauded talks.

"I initiated the renegotiation, but the President *Susilo Bambang Yudhoyono* gave it to the coordinating minister for the economy *Sri Mulyani Indrawati, to follow up*.

"I have not received any reports about the progress. It could be the renegotiation failed and we will continue to sell gas at a low price," said Kalla after presenting his economic policies and priorities as a presidential candidate before members of the Indonesian Chambers of Commerce and Industry (KADIN).

Tangguh is a massive project exploiting gas fields in the Bintuni Bay area of Papua, where a total of 14.4 trillion cubic feet of proven gas reserves have been identified. In 2002, the administration of then president Megawati Sukarnoputri signed a deal to supply LNG from Tangguh to China's Fujian province, in a contract that drew heated criticism over the low prices.

The debate over the contract grew heated in August last year, when Kalla joined forces with Yudhoyono to slam the deal, calling it "the most devastating contract ever made". Under the contract, the price of LNG was pegged at US$2.40 per million British thermal units (mmbtu), regardless of increases in crude oil prices.

The selling price improved to US$3.40 per mmbtu, but Yudhoyono and Kalla were still unsatisfied with the deal. The government then appointed Mulyani as team leader for the negotiation.

As the crude oil price declines, and Yudhoyono and Kalla have gone their separate ways in the upcoming presidential election, the renegotiation issue has disappeared from public discourse.

Last week, Energy and Mineral Resources Minister Purnomo Yusgiantoro said that based on the initial contract, the price of Tangguh LNG could only be renegotiated four years after the first gas shipment. Upstream oil and gas regulator BPMigas said the first delivery of Tangguh LNG to China would be in July this year.

During his presentation Monday, Kalla still referred to the contract as an unfair deal.

"This is dangerous for Papuan people, as they will receive less than they deserve," Kalla said.

Kalla said he would consider the renegotiation of unfair energy contracts as one of his priorities if he wins the presidential election.

KADIN have also invited two other presidential candidates to present their economic policies. President Yudhoyono is scheduled to present his economic approach on Wednesday, while Megawati Sukarnoputri, has reportedly declined to attend the event.

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