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First LNG shipment from Tangguh likely headed to Korea

The Jakarta Post ,  Jakarta   |  Fri, 06/26/2009 7:59 PM  |  Business

The giant project in Tangguh, West Papua, will deliver its first liquefied natural gas (LNG) shipment next month, with the destination likely to be South Korea, not China as initially planned, the energy minister said Friday.

“The first shipment of LNG from Tangguh will not automatically go to Fujian in China,” Energy and Mineral Resources Minister Purnomo Yusgiantoro said Friday as quoted by Antara.

“This is because the receiving terminal in Fujian is not ready yet. Consequently, the first shipment will be diverted to another destination, which could be South Korea.”

The minister added the government had managed to renegotiate the price, with both Chinese and South Korean buyers agreeing to revise the price upward.

The price of LNG for CNOOC for delivery to Fujian was initially based upon the crude ceiling price of US$25 per barrel. After renegotiations, the ceiling price was raised to US$38 per barrel.

The LNG refinery in Tangguh is managed by Europe’s largest oil and gas company, BP. In its first phase of production, it has an annual production capacity of 7 million tons of LNG. The Tangguh gas field has proven gas reserves of 14.4 trillion cubic feet.