T

he status of the much-debated Donggi-Senoro liquefied natural gas (LNG) project in Central Sulawesi is becoming more uncertain now that agreements with Japanese buyers have officially expired.

State oil and gas company PT Pertamina's head of LNG business, Hari Karyuliarto, said the LNG sales agreement with Japanese Kansai Electric Power Co. Inc and Chubu Power Co Inc had expired last Friday.

"Yes, the agreements have expired. Now, the buyers can officially terminate their contracts at any time," Hari said on Sunday.

Hari refused to comment on whether the buyers had officially terminated their contracts. He said a team of Pertamina representatives would visit Japan this week.

"We will update them on how the project is progressing. We will not ask for another contract extension as they have extended the contracts several times," Hari said.

Pertamina is a member of a three-company consortium that established PT Donggi Senoro LNG, a company set to build and operate the LNG plant. Pertamina holds a 29 percent participating stake in the venture, while PT Medco Energi Internasional holds 20 percent and Japan's Mitsubishi Corporation holds a controlling 51 percent share.

The consortium signed by the end of February a Head of Agreement (HOA) with Japanese Kansai Electric Power Co. Inc and Chubu Power Co. Inc, stipulating that each company would be supplied one million ton of LNG per annum from the plant for twelve years, starting from 2012.

However, the contracts and project are in a state of limbo as Vice President Jusuf Kalla announced in mid June that gas from the Senoro and Matindok fields intended to supply the plant, had to be sold domestically instead.

To give Pertamina and Medco time to negotiate with the government, Chubu and Kansai have extended the HoA several times, with the latest extension due to expire by the end of July.

Lukman Mahfoedz, project director at Medco, said the consortium still expected the Japanese buyers to wait a bit longer. "We are still asking the buyers to wait while we are hoping the government will decide on this matter immediately."

He added the consortium's initial proposal to develop the gas resources in the fields of Senoro and Matindok was still the best one so far.

According to the consortium, to develop the fields in a cost-effective way, as much as 335 million standard cubic feet per day (MMSCFD) of gas from the two fields had to be supplied to the Donggi-Senoro LNG plant, which agreed to buy the gas at US$6.16 per British thermal unit (MMBTU).

Lukman added the project also met the requirement to allocate 25 percent of the gas produced to the domestic market, as stipulated in the law on oil and gas.