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Indonesia to seek higher price from China for LNG

05.13.2013  | 

Under the existing contract, Indonesia can renegotiate the price when oil prices shoot up. The price of oil strongly correlates with the price of natural gas and LNG. The current contract, signed in 2006, uses a formula which assumes an oil price cap of $38/bbl, resulting in a selling price of $3.45/MMBtu.

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By DEDEN SUDRAJAT

JAKARTA -- Indonesia will send a delegation to China later this month to seek a higher price for its liquefied natural gas, the head of oil and gas upstream watchdog SKK Migas said Monday.

"We've met with Cnooc officials" during their visit last week, Rudi Rubiandi told reporters. "Our delegation will go to China on May 30."

Cnooc is the biggest buyer of LNG Tangguh, located in Indonesia's Papua.

Under the existing contract, Indonesia can renegotiate the price when oil prices shoot up. The price of oil strongly correlates with the price of natural gas and LNG.

The current contract, signed in 2006, uses a formula which assumes an oil price cap of $38/bbl, resulting in a selling price of $3.45/MMBtu, Energy and Mineral Resources Minister Jero Wacik said last week.

Although the price is higher than the initial contract in 2002, it pales in comparison with the current domestic price of $6-$11/MMBtu.

Mr. Rubiandini said Monday that the delegation will renegotiate the sales price to be in line with the domestic range.

"We hope to get the highest price, but we expect a minimum of $6/MMBtu," he added.


Dow Jones Newswires



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