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Paying more for Tannguh.

China National Offshore Company (CNOOC Ltd), China's largest offshore oil and gas producer, will increase the price it pays for gas from BP's Tannguh project in Indonesia, the head of Indonesia's energy regulator said.

The existing 25-year supply deal, under which CNOOC ships around 2.6 million tonnes of liquefied natural gas (LNG) annually from Indonesia's West Papua province to China's second LNG terminal in Fujian, was signed in September 2002.

Under this agreement, the gas price was linked to oil prices and capped at $25 per barrel, and came to $2.40 per million British thermal units (mmBtu). This was increased in 2006 but remained capped at an oil price of $38 per barrel and came to around $3.35 per mmBtu.

"The president of CNOOC told the Energy and Mineral Resources Minister directly that they were ready to increase the price," upstream oil and gas regulator SKKMigas chief Rudi Rubiandini said in a press release, referring to a meeting between Indonesia's energy minister Jero Wacik and CNOOC chairman Wang Yilin in Jakarta.

During the meeting the energy minister told CNOOC that its gas contract was no longer at an acceptable market price, energy ministry spokesman Susyanto said in a separate statement.

In contrast to CNOOC, Indonesia sells gas to Japan and South Korea for more than $16 per mmBtu and to domestic buyers for $10 per mmBtu.

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Publication:Oil & Gas News
Geographic Code:9INDO
Date:May 20, 2013
Words:249
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